Things to Know While Opening a Petrol Pump Business

Undoubtedly considered one of India’s most lucrative businesses, opening a petrol pump can be a high profit-making enterprise. The main and most obvious reason for this is the undying demand for fuel by the transportation and logistics sector. Other transportation businesses are booming, which are invariably creating the requirement for fuel at higher frequencies, especially for those in the daily commuting processes. 

However, how to start a petrol pump can involve a lot of paperwork and formalities that need to be fulfilled with accuracy. Various licenses would need to be obtained from both public as well as private sectors oil companies such as Bharat Petroleum Corporation Ltd. (BPCL), Hindustan Petroleum Corporation (HPC), Essar Oil Ltd., Indian Oil Corporation, Oil and Natural Gas Corporation (ONGC) and many others. Studies have shown that there will be a lot of opportunities created for those who want to start a petrol pump business in 2020.

Why Petrol Pump Business:

It is considered one of the most lucrative businesses in the nation. Many companies have taken to transportation and logistics to continue running their businesses, in return, increasing the demand for fuel by leaps and bounds. Small food catering companies, daily commuters to large transportation companies, everyone needs fuel. Once you have dealt with the commencement processes of how to start a petrol pump business, you will then be almost ensured of running a successful business.

Factors to Consider When Opening a Petrol Pump Business

Even though a petrol pump business will reap great benefits in the long run, the initial process of starting, it needs to be properly taken into consideration. Without the completion of the following mentioned factors, opening an enterprise of this genre will not be possible.

Some of the points you should consider when venturing into this type of line of work are stated below:

1. Eligibility Criteria 

There are a few eligibility criteria that need to be in place before you can start your own petrol pump business.

• The applicant should be within the age range of 21 years to 55 years.
• The aspiring business owner should be an Indian citizen. In case you are an NRI (Non-Resident Indian), you should have been stationed in India for a minimum of 182 days.
• A birth certificate shall be applicable to prove age.
• A 10^thstandard mark sheet will be needed for submission.
• Educational qualifications shall be 12^thstandard pass for general category and 10^th standard pass for all other categories (SC/OBC/ST).
• To be able to open a petrol pump business in an urban settlement, the applicant will have to have completed his/her graduation.
• The location of the business in question should not be under the blacklist category.
• Minimum education is not required for freedom fighters under the CC2 category.
• Minimum and maximum investment for rural and urban areas will be Rs. 15 lakhs – Rs. 2 crores, respectively.

2. Land Requirements

The applicant must have land to his or her name or in areas that can be opted for a long lease tenure. Typically an area ranging from 800 square meters to 1200 square meters will be considered adequate for a petrol pump business.

• Rural retail outlets– Land in rural areas will be applicable but not on highways under this category.
• General retail outlets– National state highways will be included in this category.

3. Required Investment

 Different funding is required to open a petrol pump business in both rural as well as urban areas. The former would require an amount of Rs.15 lakhs – Rs. 20 lakhs, whereas the latter would need Rs.30 lakhs – Rs.35 lakhs. The following mentioned types of funds can be used when mapping out how to start a petrol pump venture. The applicant can pay in bonds, fixed deposits, and various other forms, as mentioned. However, in addition to the below mentioned, he can also consider jewellery and cash as valuable finance.

• Savings accounts
• Postal schemes
• Mutual funds
• Fixed deposits
• Petrol pump loan
• Bonds
• Shares
• Bank deposits

4. Applying for a Dealership

You can apply for a dealership with various leading oil marketing companies (OMC’s) online. These companies often advertise in newspapers and on different online portals with relevant information. Visit the official website and follow the directions thereon to be able to submit a successful application. Often, when many people are applying for the same location, the winner is announced via a lucky draw held by the company.

5. Necessary Permissions and Certificates

To run your petrol pump business, you will be required to obtain some certificates and permissions so that there are no hurdles during the business’s execution. Some of these will include the following;

• Certification and NOC’s (No objection certificates) from relevant authorities
• A certified copy of the location
• No objection certificate (NOC) from the respective licensing authority
• Relevant permissions and alike from Municipal Corporation Department (MCD)
• Relevant permissions from the Fire safety department

6. Costs and Surcharges

There are a number of fees and additional charges associated when commencing a gas station venture. These costs are as stated below and are mandatory.

• Cost of license for ‘B’/’DC’ retail outlets – Rs. 16/KL for high-speed diesel fuel and Rs. 18/KL for motor spirits.
• Cost of license for ‘A’/’CC’ retail outlets – Rs. 41/KL for high-speed diesel fuel and Rs. 48/KL for motor spirit
• Application fees – An application fee of Rs. 1,000 is needed to be deposited for general retail outlets, whereas Rs. 100 is required for rural outlets. Other categories, such as SC/ST/OBC are offered half-off as a discount on these fees.
• Fixed payments – If the owner/applicant owns land in the same area as the aspiring petrol pump is to be started, they will be required to pay an amount of Rs. 5 lakhs for a rural area outlet and Rs. 15 lakhs for regular retail outlets. In case it is a company owned dealership, then the fees will be Rs. 10 lakhs for a rural area outlet and Rs. 30 lakhs for a general outlet.

7. License:

The applicant can obtain a license to run a petrol pump from the state authorities. This depends on the desired location and relevant permission from the Municipal corporation department of that specific site. He would also need No objection certificates (NOC’s) as well as certificates of location along with all the above mentioned to be able to procure the license.

Once he has battled the complex procedure of obtaining the license to run his petrol pump business, he will need to register the company by getting the GSTIN number to pay the required GST (tax). After this, he will need to open a current account under the company’s name to start running the show. The applicant can only apply for one location, i.e., rural or urban. Unfortunately, you cannot apply for multiple location licenses when venturing out into the petrol pump business.

The ease of starting a Petrol Pump Business in India  

Starting a petrol pump business in India is easy but can be a lengthy task with few complexities here and there. One needs to ensure that when venturing into this sort of enterprise, he or she will need to match the eligibility criteria, have sufficient capital, obtain necessary permissions and licenses as well as be a standard 12 graduate at minimum. All of these also come with standard terms and conditions applicable, which will be informed to you by the company you are applying with. 

Minors – Unfortunately, a minor cannot apply for the same. The age eligibility for being able to apply for a petrol pump business ranges from 21 years to 55 years. In case you wish to start a business for your child or another minor applicant, you might need to appoint a nominee who is an adult and name the business in his/her name until the minor is of valid age. This information will be given to you in detail by the company that you are applying with.

NRIs – NRIs can start a petrol pump business in India despite being an NRI provided he has lived in the country for around 6 months minimum. If he matches this criterion, then he can be eligible to be a petrol pump business owner in India and run a successful venture. 

A few good dealerships for petrol pumps, which are the best of the lot

Hindustan Petroleum (HP), Bharat Petroleum (BP), Shell, Reliance petroleum, Essar Oil, ONCG, and Indian Oil are some of the most popular petrol pump dealerships in the country. Of the lot, Indian Oil is reputed to be the best dealership of the lot, but this is largely also based on the benefits that are given out by the company towards dealers.

Loan availability

If the applicant matches all the eligibility criteria, the next option is the availability of funds. In case they do not have the funds, they can apply for a petrol pump loan. However, it is imperative to note here that this is solely at the bank’s discretion and will heavily depend on the assets and liquidity he submits to the bank as collateral. Personal loans from family, friends, and additional parties is always an insider’s trade and doesn’t come in the way of starting the business. However, investment money should be 100% percent legitimate.

The area in which the petrol pump business is proposed is key. The location will determine whether the venture is a success or a failure. Heavy traffic areas such as state and national highways, thickly populated residential areas, bustling commercial hub neighborhoods, and markets and malls make for lucrative areas to open a gas station. After zeroing in on a desirable location, one can get his licenses, necessary permissions, and take off on a journey of extreme success and a foolproof career.