Business Idea: How to start petrol pump business in India
The petrol pumps business idea is undoubtedly considered as one of the most profitable business ideas in India and globally.
The primary reason for this is the growing demand for the daily commute of the common man and never ending and ever increasing demand from the transportation / logistics industry as well as the industrial and chemical industries.
In addition, in today’s day and age, owning a vehicle has become almost indispensable for a middle class person to ensure his comfort and convenience in everyday life.
Although it requires a lot of paperwork and legal formalities to complete, still this business stands amongst the top revenue-generating businesses across the nation.
So, choosing to start your own petrol pump business is a possible option nowadays. Even though it demands a fair bit of legal responsibilities and paperwork, it is still one of the most lucrative businesses in India.
In addition, oil marketing companies (OMCs) aim to create more viable opportunities to promote the growth of petrol pump business in India in 2022-2023.
According to OMC announcements, opportunities to open petrol pumps will be created in 2021. Not many people know the process involved in starting a petrol pump business; So let’s discuss some important information for opening a petrol pump in India.
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Starting a petrol pump is the most lucrative business, especially when it is located in busy places like highways or cities.
With the growing number of private and commercial vehicles in India, the demand for petrol pumps is also increasing. Apart from this, when paired with restaurants, hotels or general stores they can help in extra income. But first, let’s understand how to start a petrol pump in India.
Petrol pump licenses and franchisees must be obtained from any one of the public and private sector oil marketing companies (OMCs) including Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation (IOC), Hindustan Petroleum Corporation. Ltd.
The procedure and formalities for opening a petrol pump business in India are as follows:
To open a petrol pump in a rural area, the applicant is required to have a minimum fund of ₹ 15 – ₹ 20 lakhs. Whereas, the investment amount for opening petrol pumps in urban areas is ₹ 30 – ₹ 35 (if the land is self-owned).
Applicants can use the following types of funds to open a petrol pump:
- Deposits with Bank, Postal Schemes, and Registered Companies
- Funds in savings accounts
- Shares of listed Companies in Demat Form
- National Savings Certificates, etc
- Mutual Funds
- Bonds and shares
Following types of funds that will not be considered:
- Material possessions, Cash, and Jewelry
- Current account funds
Eligibility Criteria for Opening Petrol Pumps in India
The Government of India has set certain criteria that must be met before applicant can start the process of opening a petrol pump in India:
If you are an entrepreneur and opening a petrol pump is your startup idea, then first of all you need a petrol pump license. Here are the eligibility criteria you must pass to do this.
- The minimum age limit of the applicant should be 21 years and the maximum age limit should not be more than 55 years.
- The owner of the petrol pump business should be a citizen of India. In case of NRI applicant, he / she should have lived in India for more than 182 days.
- For a person living in a rural area, a minimum educational qualification of 10 + 2 certificate is required.
- For a person living in in urban areas, the minimum educational qualification should be a university degree certificate from a university recognized by the UGC.
- The selected business location should not be excluded or come under the blacklisted zone.
- For CC1 category applicants, 10th certificate is required and for CC2 category, 10 + 2 certificate is required.
- A minimum investment of ₹ 15 lakh or more is required.
- Applicants belonging to the Freedom Fighters category are exempted from the rules.
To get petrol pump dealership in urban areas, applicant has to invest Minimum of 2 crores or more.If you qualify for all of the above steps, you can apply for a petrol pump license.
The land for petrol pumps has to be selected according to the analysis of petrol companies. These patrol companies usually issue advertisements about approved land locations.
You need to make sure that the area of your chosen land falls under that category before proceeding with the application. You will also need to ensure that you meet the following land criteria:
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According to the notification, the applicant should have land under his own name or areas where land can be leased for a long period. There are two types of retail outlets that can be opened in the following locations:
i) Regular retail outlets: on national and state highways; Urban and semi-urban areas
ii) Retail Outlets for Rural Area: Land in rural areas but not on National Highways
- Ideally, an area of 800 square meters – 1200 square meters is suitable for opening a petrol pump.
- The land must either be owned by you or leased by the oil dealership for a period agreed upon.
You need to make sure that all the legal documents of the land are available for the verification process.
The required land area should be at least 800 square meters to 2000 square meters depending on the location.The selected land should be developed and leveled and can be easily accessed from the road.
If you have your own land, it’s great. If not, you can take the land on a long-term lease and get a No Objection Certificate signed by the owner.
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Once the location is determined, the petrol pump, retail outlets are classified into two categories. Land on and near national highways – urban and semi-urban areas. These are called regular retail outlets.
Once you apply to the company and get selected, you will need to do certain brick and mortar constructions on site to start the petrol pump.
For example, solid and paved roads for vehicles to enter and exit, compound walls and safety measures in case of fire hazards.
Application for license
The process of applying for a license on how to open a petrol pump is simple and can take less than two days.
First, the applicant has to visit the official website of the oil marketing companies, or they may refer to the newspapers where OMC usually gives advertisements for setting up petrol pumps at various places.
Permissions and Certificates
In order to open a petrol pump, the applicant needs to obtain certain certificates and permissions to operate his dealership without any hassle and stress. Some of these include:
- NOC from the Licensing Authority (No Objection Certificate)
- Certified copy of location
- Certificate and NOC from the concerned authorities
- Permission from the Municipal Corporation Department (MCD) and the Fire Safety Office
The location of a petrol pump is a major factor in the success or failure of a business. Petrol pumps should preferably be installed on busy national or state highways, residential areas, popular markets and high-traffic roads.
After obtaining the license, the applicant is required to install petrol pumps and oil bunkers in accordance with the specifications and guidelines of OMC.
Apply for a petrol pump dealership
Leading oil marketing companies (OMCs) publish advertisements in newspapers or online regarding their plans to set up petrol pump in various cities and locations across the country.
Applicants can apply online by visiting the official website of OMC to open a dealership in their desired location or area or write to the specified address published in the advertisement.
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OMCs announce the winners through lottery system, lot or bidding process if multiple applicants apply for the same area or location.
Get a business loan for working capital requirements
Anyone can get loans for petrol pumps from nationalized banks, private banks or NBFCs as well as digital NBFCs. The banks also offer:
- Loans ranging from ₹ 1,00,000 to ₹ 2 crore
- Payment term up to 3 years
- Fast loan sanction and disbursement process
- Flexibility in installment payment period
- Low interest rates
Process to apply for a petrol pump in India
If an applicant wants to know how to apply for a petrol pump, here are some basic steps to do it online:
Step 1: Visit the petrol pump dealer selection portal.
Step 2: Click on the “Register Now” option on the homepage and fill out a form to create an account. Step 3: After creating your account, log in with your ID and password.
Step 4: Click on “Available Advertising” option on the dashboard.
Step 5: Select your desired company name and local state.
Step 6: Choose the nearest area and click on “Apply Now”.
Step 7: Select “Personal” or “Partnership” from the drop-down box.
Step 8: Provide all required details, upload required documents like photo, mark sheet, land details, signature and click “Submit”.
Step 9: Now, you will be redirected to the payment gateway.
Step 10: Pay ₹ 10,000 to complete the process.
Once the license is obtained, the applicant will need to obtain a GSTIN number to pay GST and open a current account with the name of his business.
Top Petrol companies in India
Indian Oil Corporation Limited (IOCL)
Bharat Petroleum Corporation Limited (BPCL)
Hindustan Petroleum Corporation Limited (HPCL)
Reliance Industries Ltd.(RIL)
Essar Oil(Nayara Energy)
Shell India Private Limited (Shell)
Where to apply for Petrol Pump Business License?
The process of applying for a license is simple and can take less than two days. First, the applicant has to visit the official website of the oil marketing companies, or they may refer to the newspapers where OMC usually gives advertisements for setting up petrol pumps at various places.
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