Ever thought about owning a Petrol Pump Dealership in India? India is currently the world’s second-largest oil consumer, and the country is expected to become the world’s top fuel consumer by 2027.
With this increase in demand for petroleum products, there has been a corresponding increase in Petrol Pump Dealerships in India across India.
This article will tell you all about the different aspects of bidding for a petrol pump deal in India, along with the cost, procedure, and chances of bid winning.
What is a petrol pump dealership?
In India, petrol pumps are called PP dealerships. A petrol pump is a convenience store where motorists can buy petrol and diesel. In most cases, the dealership also sells other automotive items such as tires, brakes, and accessories.
Petrol pumps are usually owned by major oil companies or their subsidiaries. Dealerships sell fuel in bulk and offer a variety of discounts and services such as roadside assistance.
Advanced Petrol pumps may have self-service kiosks where drivers can fill up their tanks without having to speak to a salesperson.
The cost of a liter of petrol in India varies depending on the location. In Mumbai, for example, a litre of petrol costs Rs 106.31 while in Chennai it costs Rs 102.63. The price of diesel also varies but is usually cheaper than petrol.
The procedure to set up a petrol pump dealership in India (Quick Guide)
If want to set up your very own petrol pump dealership in India! Whether you’re a first-time entrepreneur or have experience in the petrol retail industry, the process of setting up a petrol pump dealership can be daunting.
Procedure –
- In the first step, you need to see the latest advertisement and fill out the application for the petrol pump dealership
- Then in the second stage, you need to verify your all documents which may confirm your eligibility
- Once your documents are verified you will need to participate in the bidding process by paying the required fee
- If you win the bidding then you have to obtain the required licenses and NOCs from various departments in your locality
- Then you have to fully prepare the site for the operations
- Finally, you need to install the machinery to start selling the petrol and diesel
The Total Cost of Setting Up a Petrol Pump in India
To start off, it’s important to understand that setting up a petrol pump dealership in India is not cheap. The total cost of starting up a petrol pump business can range from 50,00000 to 150,00000, depending on the size and scope of your venture.
Here’s a breakdown of the total costs associated with setting up a Regular ROs / petrol pump business in India for an open category:
| Particulars | Estimated cost (INR) |
|---|---|
| Land costs 1000m2 to 2000m2 + Development | 50,00000 |
| Application fees | 10,000 |
| Licences Fees including GST | 20,0000 |
| Bidding Amount (Non-refundable) | 15,00000 |
| Security Deposit (Open category) | 5,00000 |
| Other (Air compressor, water fridge, generator, and other accessories) | 10,00000 |
| Operating liquidity | 20,00000 |
| Total (Estimated) | 1,02,10000 INR |
Infrastructural Facilities Required to Open a Petrol Pump: Data from the above table
- Developed land with a boundary
- Tanks, Dispensing Units, Signages, Automation, etc.
- Sales Office, Store Room, Toilet, Electrical Room, Water Connection, Yard Lighting, etc.
- Generator / Inverter
- Compressor with Electronic Gauge for Air Filling (As decided by OMC)
- Driveway
- Canopy (as per Corpn. requirement)
- Customer Convenience Facilities like – Clean Drinking Water, Maintenance of Neat and clean Toilet, Telephone, etc.
India is one of the most populous countries in the world with over 1.3 billion people. With so many people, it is no surprise that there are a lot of petrol pump dealerships in India. There are over 2,500 petrol pump dealerships in India alone! That’s a lot of competition for bids!
Is the business profitable?
Petrol pump dealership in India is a lucrative business. The profitability of a petrol pump dealership in India can vary based on several factors. Here are some key considerations:
- Location: The location of the petrol pump plays a crucial role in determining its profitability. A pump situated on a busy highway or in a densely populated area is likely to attract more customers and generate higher sales.
- Competition: The level of competition in the area also affects profitability. If there are multiple petrol pumps in close proximity, it may lead to price wars and reduced profit margins.
- Operating Costs: Managing operating costs is essential for profitability. This includes expenses such as staff salaries, maintenance, electricity, and other overhead costs. Efficient management of these costs is crucial for maintaining healthy profit margins.
- Regulations and Compliance: The petrol retail sector in India is subject to various regulations and compliance requirements. Staying compliant with environmental and safety standards is necessary but can also involve costs. Understanding and adhering to these regulations is crucial for the long-term viability of the business.
- Fuel Prices: The pricing of fuel is a significant factor. Profit margins on fuel sales can be relatively low, and they are often influenced by government policies and global oil prices. Fluctuations in fuel prices can impact profitability.
- Brand and Services: If you are associated with a well-known and reputable brand, it may attract more customers. Offering additional services, such as a clean and well-maintained service station, convenience store, or other amenities, can also contribute to profitability.
- Economic Factors: Economic conditions, inflation rates, and overall consumer spending patterns can impact fuel consumption and, consequently, the profitability of a petrol pump.
Before investing in a petrol pump dealership, it’s crucial to conduct thorough market research, including a feasibility study of the chosen location. Additionally, understanding the terms and conditions of the dealership agreement with the oil company is important.
Consulting with industry experts and seeking professional advice can help you make informed decisions about the potential profitability of a petrol pump dealership in a specific location in India.
Petrol pump dealership Advertisement 2024
Petrol Pump Dealership Advertisement 2023 is closed in November 2023. For 2024, the application opening date is to be announced. Stay tuned for updates on the official Petrol Pump Dealer Chayan website. Bookmark this page for future notifications.
How to check petrol pump dealership
- Visit official oil company websites: https://www.petrolpumpdealerchayan.in
- On the left side of the screen navigate to the latest Advertisement Section like for this year “Advertisement 2024” Click on that and you will be redirected to the Advertisement page
- On the next page, navigate to the “Latest Updates” section and choose the advisement related to your State/Province. A new page will show you the details like the oil company name which has published the advertisement, State Name, Opening, and Last Date of application. The page also provides some crucial details related to the new dealership like its – Region, District, Location Description, Type of RO, Mode of Selection, Category Name, Status, etc. Here you can also filter the information by selecting your district, Type of RO, mode of selection, or Category Name.
- Click on View Advertisement Details and collect the information. You must also download the: Brochure for selection of retail outlet dealers for guidelines, eligibility criteria, and requirements. This is one of the most important documents you must read before applying for a Petrol Pump Dealership in India. Download and complete application forms from the website.
Read this also: Appliance Insurance Choice Home Warranty: Everything you should know.
How to apply?
Applying for a petrol pump dealership in India involves a straightforward process outlined below:
- File Application via Dealer Chayan Portal: Initiate the process by submitting an application through the Dealer Chayan Portal (https://www.petrolpumpdealerchayan.in/) to the relevant government authorities.
- Participate in Bidding and Scrutiny: Engage in the bidding process and undergo scrutiny to assess your suitability for the dealership. This step involves evaluation by the authorities.
- Develop and Submit a Detailed Plan: Draft a comprehensive plan outlining the details of your proposed petrol pump dealership. This plan must be submitted to the government for approval.
- Commence Construction: Once approval is granted, proceed with the construction of the petrol pump station. Ensure that the construction adheres to the approved plan and meets the specified standards.
- Operational Readiness by Specified Date: Complete the construction and make the petrol pump station operational by the specified date as stipulated by the authorities.
- Consult with Business Advisor: Seek guidance from an experienced business advisor throughout the process. Consulting with professionals can provide valuable insights and enhance the likelihood of a successful application.
- High Chances of Winning Bid: The chances of winning the bid for a petrol pump dealership in India are generally high. However, careful consideration and consultation are recommended to make informed decisions.
- Ideal Business Opportunity: A petrol pump dealership presents an ideal business opportunity, especially for those aspiring to start their own venture. The steady supply of fuel ensures a reliable income stream.
It’s crucial to stay informed about any changes in the application process and adhere to the guidelines provided by the relevant authorities.
Consulting with professionals and adhering to all regulatory requirements will contribute to a smooth and successful establishment of the petrol pump dealership.
Please note: To pursue a petrol pump dealership in India, start by completing and submitting the application form to the relevant government agency. Once your application is processed, the agency will send you a notification on your email or mobile number for further action.
Which company is best for a petrol pump dealership?
Here are four major oil companies in India that are known for offering petrol pump dealership opportunities:
- Reliance Petroleum
- Indian Oil
- Hindustan Petroleum (HP)
- Bharat Petroleum
What is the profit margin?
Petrol prices in India are high, and the profit margins of petrol pump dealerships are high too. This means that while the prices of petrol at the pump may seem cheap, the actual cost to the dealer is high.
Currently, the commission of the seller will vary from 2.5% to 4% per liter sold. Dealers typically earn a commission on each liter of petrol sold, and this can vary between oil companies and regions.
Document required
Below are the documents required if someone wants to open a petrol pump dealership in India –
- Aadhaar Card
- PAN Card
- 10th Marksheet
- ITR details (If any)
- GST Registration
- Bank passbook
- Land ownership-related records like – Khasra, Patta etc
- NOC from various departments like – the Forest Department, Fire Department, Excise Department, Municipalities or Local authorities, and so on
Eligibility Criteria
In India, there are many petrol pump dealerships available in different parts of the country. However, before you can apply to become a petrol pump dealer, you first need to meet certain eligibility criteria.
To be eligible for the petrol pump dealership business in India, you must be at least 21 years old along with other eligibilities –
| Citizenship | He should be an Indian |
| Residential status | Resident of India |
| Age | Minimum 21 and Maximum 60 |
| Educational qualification | Passed Minimum 10th |
| Land ownership | Applicant should own land or have taken on lease for min 30 years |
Requirement of land to set up a petrol pump in India
To ensure that you get a petrol pump lease or purchase in India, it is important to know the requirements that must be met.
To set up a petrol pump in India, you will need an approved commercial land plot with an approved building on it. The land must be of good quality and free from any restrictions such as wetlands or wildlife sanctuaries.
The ideal size of the land for the Petrol Pump shop should be between 1000 m2 to 2000 Square Meters.
Once you have obtained the required approvals and purchased or leased the land, you will need to obtain permits from local authorities. These permits may include permissions for construction, installation of pumps and other related infrastructure, and operation of the petrol station.
You will also need to file tariff proposals with the Indian Oil Corporation (IOC), which will determine the price at which petrol will be sold at your petrol pump.
Application Charges
The application fee may vary depending on the type of ROs, for example –
Fee for Regular ROs (Non-refundable):
| Locations reserved for the OBC category | Rs. 3000/- |
| Locations reserved for OBC category | Rs. 5000/- |
| Other locations | Rs. 10000/- |
Fee for Rural ROs (Non-refundable):
| Locations reserved for SC/ST category | Rs. 2500/- |
| Locations reserved for OBC category | Rs. 4000/- |
| Other locations | Rs. 8000/- |
License Fee
The government has set up several regulations to ensure that businesses operate within the law and this includes setting up rules for petrol pump dealerships. To open a petrol pump dealership, you will need to obtain a license from the government.
For the investments made at the RO towards Land and infrastructure/facilities by the
The Corporation, Licence Fee would be payable on a per KL basis by the dealer as applicable from time to time.
In the case of Corporation “A” / “CC” site ROs, including ROs developed under the Corpus Fund Scheme for SC/ST category dealerships, the current Licence Fees including GST are as
under:-
| Petrol | Rs. 472.77 / Kl |
| Diesel | Rs. 393.97 / Kl |
For Dealer owned “B” / “DC” site ROs the current Licence Fees including GST are as under –
| Petrol | Rs. 233.45 / Kl |
| Diesel | Rs. 194.54 / Kl |
Challenges in the business
The petrol pump business in India, while lucrative, comes with its share of challenges. Here are some key challenges faced by entrepreneurs in this industry:
- Regulatory Compliance: Adhering to the numerous regulations and compliance standards imposed by government authorities can be challenging. Meeting environmental, safety, and other regulatory requirements requires constant vigilance.
- Land Acquisition: Acquiring suitable land for setting up a petrol pump can be a complex process. The availability of prime locations and meeting the specific size requirements pose challenges, especially in densely populated areas.
- Intense Competition: The petrol pump sector in India is highly competitive, with multiple players vying for market share. Standing out and attracting customers in a saturated market requires strategic planning and marketing efforts.
- Fluctuating Fuel Prices: The volatility of global oil prices directly impacts profit margins. Sudden fluctuations can affect the pricing strategy, making it challenging for petrol pump owners to maintain consistent profitability.
- Security Concerns: Petrol pumps are susceptible to theft and security breaches. Ensuring the safety of both staff and customers, as well as protecting valuable inventory, requires investment in robust security measures.
- Dependence on Oil Companies: Petrol pump dealerships are often dependent on oil companies for fuel supply and pricing decisions. Changes in policies or relationships with oil companies can impact the overall business dynamics.
- Operational Costs: Operating and maintaining a petrol pump involves significant operational costs, including staff salaries, maintenance, utilities, and compliance expenses. Managing these costs while staying competitive is a continuous challenge.
- Technological Changes: Adapting to technological advancements in payment systems, fuel dispensing technology, and customer service platforms is essential. Keeping up with these changes requires ongoing investment and training.
- Environmental Concerns: Increasing awareness of environmental issues poses challenges for petrol pump businesses. Meeting eco-friendly standards and addressing concerns related to pollution and carbon emissions is crucial.
- Market Dynamics: Understanding and navigating the dynamic market conditions, consumer preferences, and economic fluctuations is a constant challenge. Petrol pump businesses must stay agile and adaptable to market changes.
Pros and Cons
A petrol pump is a convenient and economical way to get fuel for your vehicle. However, there are a few things to keep in mind if you’re thinking of having one in your neighborhood.
Pros
- Convenient location – usually located near major roads and highways
- Wide variety of fuel types and prices
- Reasonable turnaround time for getting fuel
- High earning business
Cons
- Prices can be high, especially compared to prices at filling stations in Madhya Pradesh.
- Not all pumps offer the same quality of fuel
- Can be crowded, especially during busy times
- It requires high precautionary measures like – fuel leakage and fire prevention etc.
- Owners may face low revenue initially.
Conclusion
Starting a petrol pump business in India can be a good way to make money. The article explains the steps involved, like applying for a dealership, the costs, and what it takes to be successful.
It points out that setting up a petrol pump requires a significant investment, ranging from INR 50,00000 to 150,00000, and outlines the necessary facilities like land and equipment. Success in this business depends on factors such as location, competition, and managing costs.
The article also highlights an ongoing Petrol Pump Dealership Advertisement for 2024, urging interested people to apply through the official website. It concludes by emphasizing that, despite challenges, a petrol pump business can be profitable with careful planning and following the rules.
Read this also: