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Starting a Petrol Pump in India

Starting a Petrol Pump in India

Petrol pump is one of the large profit-generating business. Fortunately, petrol pump companies are looking to add 65000 more pumps before the end of 2019. Undoubtedly, this number will increase in the coming years. Certainly, this is a golden opportunity for any entrepreneur in India. But, just like any other business, this venture has its requirements.

How do you become eligible to start a petrol pump in India?

  • First, you must be an Indian citizen before applying for a license to own a petrol pump. If, however, you’re a non-resident and still interested in applying for the license, you must have proof of existence in India for 180 days.
  • Secondly, you must be 21 years and above and a maximum of 55 years.
  • You must provide a photocopy of the 10th mark sheet to prove your age.
  • If you live in a village and either belongs to SC/ST/OBC classification, then you must have 10th On the other hand, if you belong to general category, you should have 12th pass.
  • If you wish to have a petrol pump in an urban environment, you must be a graduate.

You can typically divide the application process into two. So, if you have all the above qualifications, you can proceed to the second phase of an application. This includes evaluating how much you might need to start and run the business and other needs as per government and petrol dealer preferences.

How much money do you need to start a petrol pump in India?

There are two things to define how much you’ll spend. First, you can provide land, and a company will put up the rest with their finances. Alternatively, you can choose to use your property and funds to put up the petrol pump business.

In other words, you can invest in Company Owned Dealer Operated or Dealer Owned Dealer Operated.Ideally, you should have between 60 Lakhs to 1 Crore rupees to venture into the later kind of business. If, however, you own land but lack the finances, you can apply for a business loan for petrol pump.

The money you wish to invest can be in form of:

  • Bonds
  • Jewelry
  • Mutual funds
  • National saving certificate
  • Shares in some selected companies or those listed in Demat account
  • Savings account

How much land will you require to set up a petrol pump?

The most important thing before starting a petrol pump business is to own a piece of land. Look around; every petrol station requires land on which you can set the pump. Typically, you have to install a facility in which you can safely store your petrol as well as enough area to conduct other services a petrol station does.

So, if you have a land under your name or family, you are good to go. Alternatively, you can lease some property and obtain a No Objection Certificate indicating that the owner of the land has no objection to anyone setting up a petrol station on the property. But how much land is enough? Ideally, you should have 800 square meters in an urban area on which you can put up the petrol station. If, however, you own land alongside state highway or national highway, it should be between 1200sq meters and 1800sq meters.

It is important to note that oil companies scrutinize the documents you provide to show ownership of your land. The company has to also look at the location of your property because it determines whether it will make more sales or not.

Oil companies prefer to give tenders to people owning land along state or national highways.

 How much can you make from the business?

Most energy companies pay on commission. So, the more petrol and diesel you sell, the more you make.Averagely, you could make Rs.3 per liter of petrol and Rs. 2 of diesel. Suppose you sell 50,000 liters of petrol and 150,000 liters of diesel. With a commission of Rs. 3 and RS.2, you could make a gross income of Rs. 450,000. You, however, need to subtract salaries for your employees and maintenance fee of approximately Rs.100, 000. Indeed, you can make as much as possible or less depending on your marketing strategies and location of your business.

Application Process

The process of applying for a license for a petrol pump business is quite transparent. All you need is to pay a fee of Rs. 100 for rural ROs and Rs 1000 for regular ROs. You can fill the form online or offline, depending on the company you want the association with. You need to provide accurate information regarding everything you’ll be required to fill.

After acquiring the license, you can proceed to other operations of starting your business. This means you’ll begin to spend money on infrastructure and other things which include:

  • Consent from the Municipal Corporation
  • authorization from the Fire Safety Office
  • NOC from a licensing authority
  • Certified copy of your current location for the right of way
  • Certification and NOC from involved authorities

All these requirements are in regard to keeping you and everyone else safe. For instance, the tanks that store oil in the underground must meet specific criteria in accordance to rules of storing fuel.

Here are steps to follow when applying for dealership offline

First, look for contacts belonging to dealers’ offices online. You’ll find a list of dealers with a subcategory of areas they wish to set up businesses. On the list are a number you can call and inform the receiver on the other end that you have a land and want to apply for a petrol pump dealership.

What if you want to apply online?

First, visit a petrol pump dealer website, click on register now, fill the form provided, and create an account. If that is successful, log in with your email and password to access the “available advertisement” button. After clicking on the button, select the company you want dealership from and the state you wish to open a business. You’ll get a list of places in your favorable country where the oil company hopes to have a station. Pick the location that works for you.

At this point, you have 40 minutes to fill a form provided. It is, however, essential to read a brochure before filling the form because filling incorrect information might not work to your benefit. You also need to select an individual or partnership radio button.

Proceed to fill personal information and upload your photo and signature. Click the submit button. A pay page will appear where you need to input debit card, credit card, and net banking number through which Rs. 10,000 will be deducted from.

Is the petrol pump business worth it?

The license and requirements of opening a petrol pump business are not about to reduce. This means very few can pass the cut. It also means that the few people who can get into the industry are due to receive massive profit. Although it will require hard work, money, and time, the venture will be all worth it.

In summary, you need to

  • Have enough money
  • Check the listed points where oil companies wish to set up a station
  • Have land in one of those places
  • Apply for dealership

If you qualify for all the above, a team will be sent to your location to evaluate whether it passes the requirement. If it does, the oil company will proceed to make a business deal with you.