Guide to Starting Petrol Pump Business In India: Cost, Eligibility, and Requirements

There are many concerns such as fuel station operating costs, license approval process, land details, etc. Numerous oil firms, such as Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL), Indian Oil (IOCL), Acer Oil, or any other oil company, offer their dealerships to interested parties. Therefore, there are many possibilities for opening petroleum pumps in India in 2020. Below is the guide to starting petrol pump business in India.

Many people do not know how to open a petrol pump in the country or the state concerned because they do not have accurate information. Starting a gas station is one of the most lucrative businesses, especially when it comes to busy places like highways or cities. With the growing number of vehicles in India, the demand for petrol pumps is also increasing. In addition, when paired with restaurants, hotels, or general stores, they can help generate additional revenue. Running a petrol pump is one of the most important business ventures right now.

Guide to starting petrol pump business in India

Application process

The process of applying for a license for a petrol pump business is very transparent. All you need to do is pay a fee of Rs.100 for rural ROs and Rs.1000 for regular ROs. You can fill out the form online or offline, depending on the company you want to be affiliated with. You need to provide accurate information about everything you need to fill out. Once licensed, you can switch to other start-ups. This means you will start spending money on infrastructure and other things, including:

Consent with the Municipal Corporation.
Permission from Fire Safety Office
NOC from Licensing Authority.
Certified copy of your current location to the right of way.
Certification from relevant authorities and NOC

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All of these requirements are for your protection and the protection of others. For example, underground oil storage tanks must meet certain standards by fuel storage regulations.

Investment is required to start a petrol pump:

If you meet the above criteria, the next step is to prove that you have the minimum funds to start a petrol pump. Although the requirements may vary from place to place, the general rule is to prove the ability to invest at least Rs. 13 lakhs for rural areas and at least Rs. 25 lakhs for urban areas.

List of funds to consider to start this business

Funds in a savings account
Bonds, Mutual Funds, and Shares (Considered Only 60%)
National Savings Certificate

Here is a list of funds that will not be considered:

Cash, jewelry, material assets, etc.
Funds in the current account.

If you are eligible for all of the above steps, you can apply for a petrol pump license.

Petrol pump license

Currently, the license fee for a petrol pump is approximately INR 18/KL for motor spirits and INR 16 / KL for high-speed diesel for retail outlets of the “B” / “DC” site, and INR 48 for motor speed. / KL and INR 41 / KL for high-speed diesel for a corporation-owned “A” / “CC” site retail outlets. Candidates must meet the following conditions to apply for a petrol pump license.

The candidate must be of informed age.
There should be no other petrol pump within 5 km from the place where the candidate is applying.
The candidate’s land should be on the road.
The candidate should have a security deposit. The candidate should have proper documents of land and his papers for verification.

Eligibility criteria for starting petrol pumps in India

If you are a business and opening a petrol pump is your start-up idea, then you need a petrol pump license first. Here are the qualification criteria you must pass to do this.

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Land requirement

First of all, you should have enough land in a prominent place. Generally, all petrochemical companies publish advertisements in well-known newspapers as well as on their websites. So you have to make sure that there is a suitable piece of land in the area mentioned in the advertisement. You can either own it or lease it for a minimum period as stated in the notification. Generally, the ground area required to start a petrol pump in India is between 800 square meters and 1200 square meters.

Proof of citizenship

According to the principle of income tax, you must be an Indian citizen and a resident of India. To be considered an Indian citizen, an individual must have stayed in India for 182 days or more in the last financial year.

Proof of age

You should be between 21-60 years of age. However, under the CC2 category, a Freedom Fighter may apply for a license beyond this age.

Educational qualification

You should have 10 + 2 Educational Qualification Examination for Rural ROs which is for regular ROs in Board / University and Graduation / Chartered Accountant / Diploma in Company Secretary / Cost Accountant / Engineering.

How to apply for a dealership

Occasionally there will be advertisements in newspapers or on online platforms by oil marketing companies about their dealership requirements.
They will mention that they are ready to set up a certain number of petrol pumps in different places. Keep an eye on such news.
You can apply for your dealership either by visiting their website and filling in your details for a specific location or you can write to them on their official email id to apply.
If there are many applicants for a particular place for the dealership, then the oil marketing companies (OMCs) select their candidates through bidding.
You need to invest at least Rs. 5 million to 6 million in rural areas and up to Rs. About 20 million.

VAT registration for petrol pump

VAT registration is required to choose a petrol pump business. Individuals can file value-added taxes with the help of state tax authorities. The business sells a lot, so the VAT paid by the individual is very high. VAT registration can also be done online. Almost every petrol pump in India is selling lubricants (under GST) with petroleum products (exemption under GST).

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Since they are selling taxable products under GST, GST registration is required for them. Therefore, VAT registration is required to start a petrol pump business in India. VAT registration for petrol pumps in India can also be done online by following the simple steps given below.

The registrant must visit the official VAT registration website of the state in which the business is registered.
Numerous details will be asked and need to be filled in improperly.
Any documents requested should be scanned and submitted to the official website.
The website will then be assigned a temporary VAT number.
Upon completion of the verification process which includes verification of documents, other details, etc.,
VAT registration will be done and then the business will be allotted a permanent VAT registration number.

Get business insurance

We strongly recommend that you purchase business insurance to protect your business. Running a petrol pump can expose you to many risks on a daily basis: theft, employee injury, equipment breakdown, property damage, and more. Taking an insurance policy helps protect you and your assets from potential damage or loss.

Types of insurance

Group Health Insurance
Fire & Burger Insurance
Marine insurance
Workers’ compensation insurance
Professional Compensation Insurance
Cyber Insurance
Comprehensive general liability insurance

Expected profit margin in the petrol pump business

Lease rent will be paid for the term agreed upon in the lease.
Percentage based on return on investment at the rate of 5% per annum on investment. Onsite and infrastructure development will be done on capital expenditure. The investment is calculated based on the standard cost model.
Sales commissions on actual sales are competitive, compared to current margins in the industry.

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List of Top and Best Petrol Pump Companies in India:

Indian Oil

Indian Oil, also known as Indian Oil Corporation Limited (IOCL), is India’s largest oil company. Fortune 500 Company is a subsidiary of the Ministry of Petroleum and Natural Gas, Government of India. IOCL maintains the largest number of petrol pumps in India, providing a good source of revenue to the Indian government.

Bharat Petroleum

With over 18,000 fuel stations across India, Bharat Petroleum is India’s second-largest petrol company. BPCL, also known as Bharat Petroleum Corporation Limited (BPCL), was established in November 1952. The organization is owned by the Government of India and operates under the Ministry of Petroleum and Natural Gas.

Hindustan Petroleum

HP, also known as Hindustan Petroleum Corporation Limited (HPCL), is the third-best petrol company in India. HPCL was founded in 1974 and falls under ONGC. Headquartered in Mumbai, HPCL is known for its second-largest petroleum pipeline network and infrastructure in India. HPCL owns more than 13,000 petrol pump stations and is considered one of the most trusted petrol brands in India.

Reliance Petroleum

Founded in 2008, Reliance Petroleum is the fourth largest private petrol company in India. Unlike other companies, Reliance Petroleum is owned by Reliance Industries. Reliance Industries Limited (RIL) is a private-sector owned by Mukesh Ambani and his family, the richest men in India. The company is headquartered in Ahmedabad (Gujarat) and specializes in petroleum and natural gas.

Shell Petroleum

Shell, also known as Royal Dutch Shell Oil & Gas, is an international energy company in India. The company was founded in 1907 and is currently headquartered in Hoggshot, the Netherlands. Shell India Corporate Office is located in Gurgaon. The company has more than 100 petrol pumps in India (Karnataka, Tamil Nadu, Telangana, Maharashtra, Gujarat, and Assam) and plans to expand to 1,500 in the coming years.

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Acer Oil

Sushi and Ravi Roya founded Acer in 1969. The company operates various energy sectors (such as oil exploration, refining, power generation, metals, mining, etc.). In 2017, Essar was acquired by Rosneft Trafigura, Russia’s largest energy company. The company is named Niara Energy and operates more than 6,000 petrol pumps in India (the largest private petrol network). After Jamnagar, Nyara owns and operates the second-largest refinery in Vadinar, Gujarat.

Karen India

Karen was an Indian O&G extraction and production company, which was later acquired by Vedanta Group. It is managed by Parachur Sah and is headquartered in Gurgaon. In 2019-20, Karen achieved 24% of India’s domestic crude oil production and aimed to produce 50% of India’s oil needs.

Guide to Starting Petrol Pump Business In India: Cost, Eligibility, and Requirements

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