written by | May 24, 2022

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Table of content


Table of content

Easy Guide to Start a Petrol Pump Business

The global economy in 2022 has become extremely volatile. The reasons are varied. The Russia-Ukraine war is one of the key reasons affecting the petrol prices. A petrol pump dealership is globally acknowledged as one of the most lucrative businesses. The reason is very simple. Globalisation has increased the movement of goods across geographical territories, whether by land, sea or air. This has given a huge boost to the transport industry, which also involves logistics and a host of other mediating agencies that help transport the goods. 

Today, almost every middle and the lower-middle-class family owns at least a two-wheeler. Despite the rising oil and gas prices, the business of imports and exports continues as well as the demand for two and four-wheelers. A car is no longer considered a status symbol but has become necessary for several families. Like every other business or dealership, the petrol pump business also involves certain procedures and eligibility criteria for a person to open a petrol pump.

Did you know?

The world's highest petrol pump is situated in Kaza in Himachal Pradesh, India, at an altitude of 12,500 feet from sea level.

How To Start A Petrol Pump Business In India?

In order to set up a petrol pump franchise or dealership, you have to apply for a license. Not everyone can apply for this as there are some prerequisite conditions. Once you qualify and meet the requirements, you can apply for a license. Let us understand what the requirements to be eligible for the same are.

Eligibility Criteria to Start a Petrol Pump Business

Some of the key requirements are as follows:

  • You have to be an Indian citizen.
  • You have to be a resident of India in accordance with the rules furnished by the income tax authorities.
  • To qualify for the status of an Indian resident, you must live in India for at least 6 months (182 days) or even more. This has to be done in the financial year gone by
  • The minimum age requirement is 21 years, and the maximum is 55 years.
  • For petrol pumps to be set up in the rural geographical regions of India, you should behold a Class 12 qualification.
  • Candidates who belong to SCs and STs and have completed at least class 10 of basic education.
  • Under the open category (except in the country's backwards regions), an applicant has to be a graduate from any recognised University or at least a Deemed University.
  • You have to furnish proof regarding your age. You can do it by submitting a few certificates, which need to be validated first. Some of these are:
  1. A birth certificate
  2. A Class 10 Board certificate
  3. Secondary school leaving certificate
  4. Passport
  5. An identity card issued by the Election Commission

Also Read: Start a Reliance Petrol Pump Dealership Business

Investment Required to Set up a Petrol Pump Franchise

Before you apply for a business loan, you should understand the number of funds required to start a petrol dealership in India. The petrol pump dealership cost varies across the geographical regions of the country. However, if you are planning to set up this business in rural locations, you will require at least ₹ 12 lakhs. If you plan to set up a petrol franchise in the more urban locales, you will require at least a sum of ₹ 25 lakhs. If you wish to apply the strength of your funds, the following will give you an insight into which types of funds are considered and which are not.

Funds that will be considered include:

  • Money in your saving account
  • Stock market investments – these include shares (60% only), mutual funds, and even bonds
  • Your investments in the National Savings Certificate

Funds that will not be considered include:

  • Money in your current account
  • Jewellery, cash-on-hand, other assets

If you meet the above requirements, you can apply for a license to set up a petrol business.

Application for a Business Loan to Open a Petrol Pump

Once you qualify for a license, the most important step is to apply for (a) petrol pump loan. You can apply for loans to banks and non-banking financial companies which are registered under the 1956 Companies Act. You can apply for loans to digital non-banking financial companies as well.

Land required to start a petrol pump franchise. At the start, you must understand that there are two types of locations for setting up a petrol pump. A plot of land which is easily accessible from the national highways and urban cities is classified as a regular retail outlet for setting up a fuel business. A plot of land in the interiors or rural locales is classified as a rural retail outlet. You get to know these details when oil corporations advertise these opportunities. Ideally, an area of about 8,611 square feet will suffice to start a petrol pump franchise. However, if you own that much land in the area sanctioned by the oil companies and you also meet all the other criteria, everything will fall in place smoothly. If not, you will have to lease the land for a fixed tenure as per the agreement framed with the concerned oil authority. The land should be accessible, and it needs to be properly developed and levelled as per the requirements.

Documents and the details furnished therein must be authentic and in accordance with all the necessary legalities.

Petrol Pump Dealership Cost

These brands include Hindustan Petroleum, Indian Oil Corporation Ltd, and the Essar Group. You can often access the application form for a dealership on their respective websites. If the applications are in excess, a draw of lots (lottery system) is resorted to streamline the selection process. The individual who is eventually selected has to furnish all required documents to the said Oil corporation according to the time schedules. Once the individual receives the license, the person will have to procure a GSTIN number. This is important in order to make the necessary GST payments. The person will have to open a current account in his bank on behalf of the petrol pump which they will set up.

The charges vary between the urban and rural regions. You will have to pay ₹ 1,000 for the application process for a regular outlet. In the case of rural outlets, the application fee amounts to ₹ 100 only. Individuals belonging to the backward classes enjoy a waiver of 50% of the said fees. The best way to make the payment is through a demand draft favouring the oil Corporate.

  • Cost of a license fee for sale at petrol pump – ₹ 18,00,000 (This is for gasoline which is also termed as motor spirit)
  • Cost for sale of high-speed diesel – ₹ 16,00,000
  • The rates vary for outlets owned by dealers and corporation-owned outlets.

Apply for Petrol Pump Dealership

You can apply for a petrol pump dealership via the advertisements placed in newspapers by the oil corporations. You can also apply for a dealership online. The various procedures involved in an online application are as follows:

1. Log on to the website named www.petrolpumpdealerchayan.in

 

2. On the landing page, look for the words,' ' Register Now. Click on the same

3. An application form will appear. Fill in all the details accurately.

4. Now create an account

5. On the dashboard, you will come across the words, ''Available Advertisement''

6. Click to log in with the account id and password you just created

7. Make your preferred choice of the Oil company and the State in which you reside

8. The locations for setting up a petrol pump in that State will appear on your screen

9. Select the area as per your choice

10. Now click on the button that states, ''Apply Now"

11. You are offered only about 40 minutes, within which you have to fill in all the details requested in the form

12. Next, make the appropriate selection between the two options of ''Individual'' or ''Partnership.''

13. Make a payment of ₹ 10,000

14. Furnish all your personal and other details and upload a photograph of yours

15. You will be guided to the payment gateway

16. In this space, you will have to make a payment of the requisite fees as demanded

17. Your application is complete

Also Read: How to Establish a Bharat Petroleum Franchise in India?

Certificates and Permissions

Every commercial enterprise requires permissions and certificates to start its respective operations, and a petrol pump dealership also requires some specific permissions and certificates to start seamless operations. Some of the key ones are as follows:

  • A certified copy of the location where the petrol pump is to be set up
  • A no-objection certificate from the said authorities who issued the licences
  • Grant of permission from the relevant department at the municipal corporation
  • A no-objection certificate from all concerned authorities

      

Conclusion

This article informs you about all the important requirements of setting up a petrol pump. Once you have successfully met all the criteria and have your loan and other applications in place, you must focus on the workforce you will need to employ. That will be one of the key investments. A basic qualification is a must. The individuals who you plan to employ must possess courteous social skills and be able to manage contingencies if any. You will have to do a background check to ensure they do not have any criminal records, are trustworthy and have a clean slate in their previous jobs. Additionally, you will have to train them to perform various functions, like operating a computer, data back-up, revenue collection, and various other important things.
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FAQs

Q: What is the maximum amount of loans you can apply for to start a petrol pump business?

Ans:

The amount could range from ₹ 50,000 and ₹ 2 crores. A lot depends on the retail outlet's location, the amount of infrastructure you wish to invest in, your financial stability, and your expansion plans.

Q: How much does a petrol pump dealership cost?

Ans:

It depends on the details of the retail outlets in question. However, the cost can vary from ₹ 18 lakhs to ₹ 48 lakhs and is dependent on the type of fuel you sell.

Q: Does a petrol pump dealership involve earnings by the commission on the amount of petrol sold at their outlet?

Ans:

Yes, petrol pump dealers do earn a commission. The commission amount varies between ₹ 2 and ₹ 5 per litre sold.

Q: How much monetary investment does a person need to start a petrol pump franchise?

Ans:

A person requires anywhere between ₹ 15 lakhs to ₹ 25 lakhs to set up such a venture. Sometimes the amount can exceed ₹ 25 lakhs as well.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.