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Pankaj Tyagi
| Updated: 22 Oct, 2021 | Category: Startup India Registration

How to Secure Petrol Pump License in India?

How to Secure Petrol Pump License in India

To foster the best practices in granting of petrol pump license & franchise by Oil Marketing entities, a new dealer selection process has been evaluated. As per the new process, the application is examined against pre-determined eligibility criteria. After fulfilling the eligibility criteria, the passed candidates move to the subsequent round, wherein the bidding process is executed for selecting the dealer. Thus, eligibility criteria serve a key role in the selection of the petrol pump dealer. This write-up aims to give a complete briefing on the process of securing a petrol pump license in India.  

Basic Eligibility Requirement to run a petrol pump in India

To be eligible to secure a petrol pump license, the applicant must be an Indian national as per the Income Tax rules. To avail of the Indian’s resident document, a person must have spent 182 days or more in India in the preceding financial year. Also, the age of the applicant should not be less than 21 years and more than 55 years. A copy of the high school certificate, birth certificate, or passport will serve as fundamental documents to prove the DOB.

Education Requirements starting petrol pump in India

All applicants applying for a petrol pump dealership should possess basic education qualifications. Rural petrol pump applicants who belong to SC/ST or OBC category must have passed high school, and the rest of the applicants must have passed a 10+2 examination. In the case of an open category, the applicant must have a qualified intermediate exam for rural petrol pumps. The open category applicants from the urban region must have a graduation degree granted by the recognized university in India.

Read our article:What is the Procedure for Start-up Registration India?

How much funding is needed to run a petrol pump in India? 

To commence a petrol pump, the applicant must show the ability to invest a minimum of Rs.25 lakhs in regular petrol pumps and Rs.12 lakhs in rural petrol pumps. The investment can be in the given forms:

  • Funds present in savings accounts, deposits with Bank/Registered entities /Postal Schemes
  • Bonds
  • National Savings Certificates, etc
  • Mutual Funds
  • Shares of listed Companies in Demat Form

It is vital to note that the hard cash, jewellery etc, for which ownership cannot be establisment, will not be taken into consideration. Also, the balance available in the current account will not be considered. For shares, bonds, & mutual funds, only sixty per cent of the value will considered. Secure the valuation certification for the assets from the certificate CA. 

An Outlook on the Land requirement for petrol pump dealership

The land is one of the key criteria in the selection of petrol pump dealers. The applicants are first categorized into two groups as shown below:

  • Land must be in close proximity with National Highway[1]
  • The land in question must have the proper paperwork in place.
  • In the purview of the classification above, different types of documentation must be furnished to prove ownership of the land in question. The land area must be as per the conditions cited in the advertisement.
  • If the application has opted for the petrol pump dealership, he/she has to prepare the land in question as per standard engineering practices. Presently, there is a requirement of building a retaining wall as well as a compound wall with a minimum height measure at 1.5 m, designed as per site conditions.

The above are some of the fundamental criteria for granting a petrol pump license in India. Applicants meeting these criteria will be permitted to proceed to the subsequent stage, wherein the final declaration is made based on the bidding process.

The above are some of the significant criteria for providing a petrol pump license. Applicants meeting these norms will be permitted to proceed to the subsequent phase; wherein in final decision is made either via a bidding process or lot system.

Common End-users queries regarding the opening of Petrol pump in India

How much land is required to open a petrol pump?

Typically, the area of 800-1200 sq m is adequate to open a petrol pump in India.

How much a petrol pump owner earns?

Typically, a petrol pump owner reaps a profit margin of Rs 1.2-1.4 for per litre of petrol sold; meanwhile, he earns around Rs 1.8 for per litre of diesel.

How much loan can I get for the petrol pump?

The loan amount of Rs 12 lacs is sufficient to open a Petrol Pump in a rural area. In contrast, an applicant aiming to open the petrol pump in an urban area would require investing double of the said amount.

Conclusion

Presently, nearly 64 500 petrol pumps are operating pan India. In tandem with these, the public sector giants like Hindustan Petroleum Corp Ltd, Bharat Petroleum Corp Ltd, & Indian Oil Corp collectively run thousands of petrol pumps via dealer allotment programs. Opening a petrol pump can be a rewarding experience for anyone. But one should not forget that this business model attracts tons of compliances & legal implications. Plus, the penalties are way too stringent when contrasted with any other business model.  

Read our article:Benefits of Startup India Registration in India

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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