How to Open a Petrol Pump in 7 Steps
Having a business of your own is a profitable option at the moment, and it is better if you have a petrol pump business. It is known to have high-profit margins. Your profit out of this business will be multiple times that generated from any form of business. The only thing you need to care for here is the paperwork and permissions related to the land ownership and ownership of the business.
If you are not confident about the procedure, read on, and we will guide you with a step-wise detail for opening a petrol pump without any hassle. Get your license for the petrol pump dealership business today!
Here is how to get petrol pump license in India
1. Check eligibility criteria
There are some rules that you need to follow for starting a petrol pump business. The Indian government has set up a list of eligibility to meet for starting the business. The eligibility criteria are as follows:
- You must have Indian citizenship. If you are an NRI applicant, you must have a record of staying in India for at least 182 days.
- The age of the owner should be above 21 years and not more than 55 years of age.
- If you wish to set up a petrol pump in a rural area, you need a minimum educational qualification of 10+2 years. In the case of an SC/ST/OBC applicant, you must have an educational qualification of the 10th standard.
- If you are opening a petrol pump in an urban area, you should have a graduation degree from a registered university.
- Under the CC2 category, there is no minimum educational qualification requirement for freedom fighters.
- The minimum investment required to set the petrol pump in the rural area is 15 lakhs onwards for the dealership.
- In the case of an urban locality, you will have to invest not more than 2 crores.
- The business area should not be in any restricted zone or should not be blacklisted for any reason.
2. Understanding investments
If you meet the basic eligibility criteria, you need to keep the investment ready to start your petrol pump business. For rural areas, you require an investment of 15 to 20 lakhs, and for the urban localities, the investment can run up to 50 to 60 lakhs if you own the land, or up to 2 crores if you opt for a dealership. The petroleum company ask you to deposit the dealership fee amount in any of the form given below.
The investment depends upon your location.
- Bank deposits
- Mutual funds
- Fixed deposits
- National Savings Certificate (NSC)
- Bonds and shares
- Savings account
- Postal Scheme
3. Land requirements
Running a petrol pump business has a few specified requirements. The petrol pump companies put together analytics to decide on the locations. Sometimes you will find these companies issue advertisements on land, and if your land falls under that category, you can apply for the license from the company.
You should own or take the land for lease, at least for the period of dealership mentioned by the oil company.
You need to have all the documents and licenses ready before you make your purchase or decide on the land. All legal documents should be arranged, well in advance. You require an area of 800 to 2000 square meters, and it varies depending on if it is a rural or urban location.
For the maximum profit, you need to have the location closer to the road so that more people can have access to your petrol pump.
4. Understanding additional charges and requirements
Apart from the dealership charges and location lease or rent, you will have a few additional expenses. The expenses are mentioned below:
Cost of License
You will have to pay 12 lakhs for Rural RO and 25 lakhs for regular RO. This difference in the amount is due to the location of the petrol pumps and their accessibility. This amount needs to be in the form of NSCs, bank accounts, mutual funds, bonds, saving schemes, and shares. However, you can have only 60% of this total value in the form of shares and bonds.
To start a Petrol Pump dealership business, you need to go through a transparent process. You will have to fill out a form of Rs. 1000 for regular ROs and Rs. 100 for rural ROs. However, these application fees might vary from company to company. You can fill out the form online as well, for some companies.
Depending on your eligibility, the companies will contact you. Ensure that you have filled out all the relevant and correct information in the form so that it increases your chances of being eligible for the dealership for any oil company.
5. Permissions and certificates required
When you receive the dealership from the oil company, and you start building the pump, you will have to pay for a few certifications and papers. These papers include the follows:
- No objection certificate (NOC) received from the licensing authority.
- Permission from the Fire Safety Office and the Municipal Corporation Department.
- Certificate for the location.
- Certificate and NOCs from all other related authorities.
These paperwork should be ready before starting the petrol pump dealership business. Make sure that your lawyers do a thorough check of these papers. It will ensure that you do not fall into any kind of trouble in the long run.
6. How to Apply for dealership
You will find an occasional advertisement in newspapers or on online platforms from oil marketing companies about their dealership requirements. They will mention that they are willing to set up a specific number of petrol pumps at various locations. Keep a track of such news.
You can apply for their 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 location for a dealership the oil marketing companies (OMCs) choose their candidate with the help of bidding.
7. Special Benefits and Reservations
You will come across reservations for applicants of petrol pump dealerships by the Ministry of Petroleum under the Government of India. The reservations are as follows:
- SC/STs has a reservation of 25%
- Physically handicapped has a reservation of 5%
- Paramilitary, Government Employees and Police have a reservation of 8%.
- 8% reservation for defense personnel.
- 2% for freedom fighters and people with outstanding achievement in sports.
- The remaining 50% of seats are available for general use where anyone who meets the basic eligibility criteria can avail.
How can I get to the petrol pump dealership?
You need to look out for the newspaper or online advertisement about the dealership requirement for Oil Marketing Companies (OMCs). Now you need to visit their official website and make your application there. Some companies also accept emails as applications. Keep all paper works and documentation ready before you proceed. The final selection is in the hands of the OMC authorities, and it is a transparent procedure. However, there is a reservation of 50% for the special sections.
What investment is needed to start a petrol pump dealership?
You might have to invest 15 lakhs, to begin with. Depending on the location of your retail outlet and the oil company you have chosen, this investment will vary. It can go up to as much as 45 lakhs, but the returns are also high. The cost mentioned above is only for the dealership. There are additional charges for licenses, land rent, and other paperwork.
How can I get the license for the petrol pump dealership?
You can receive the license to own and operate the petrol pump from the state authority based on your location. The municipal Corporation Department gives permissions and NOCs, along with a copy of the location certificate for starting the dealership business.
How profitable is the petrol pump business?
Your profit from the petrol pump dealership will differ depending on the Oil Marketing Company and the location of your petrol bunker. You can receive a commission of Rs. 2 to Rs.5 per liter of petrol. A large amount is paid as commission, tax, and duty. However, petrol pump dealerships are a very profitable business and considering that the requirement for petrol and diesel is not going to decrease anytime soon, you can be rest assured to receive a lot of money out of the petrol pump dealership business.
The amount of profit you can draw out of the business depends on the oil marketing company you are choosing and the location of your petrol bunker. You require a lot of manpower and effort to ensure that the petrol pump dealership business runs well.
Which petrol pump dealership should I opt for?
Indian Oil is the most profitable and popular oil marketing company in India at present. The profit will depend on what kinds of oil companies the customers are preferring. Some of the leading oil marketing companies in India are Bharat Petroleum, Indian Oil, Shell, Hindustan Petrol, ONGC, Essar Oil, Reliance Petroleum, etc.
Is there a commission?
As already mentioned, you can expect a commission of Re. 2 to Rs.5 per liter of petrol depending on the oil marketing company you are choosing.
How to increase profits
If you want to know which petrol bunk is best, it is very difficult to decide. Different customers prefer different petrol bunkers, none of it is big or small. Most of your profit depends on the location of your bunker and how you market the bunker to the customer. Your service to the customers is also a key factor in determining the profit. Manpower and your efforts will determine your success as the petrol bunk dealership business.
Plan your business, get the papers ready, and have all documents in order before you set foot in the business of a petrol pump dealership. The dealership business can help you gain a lot of profit with the right kind of effort in the right places. It will not take much time before you start reaping the profits from your business.