How to get a loan to start your own petrol pump business
Want to start a petrol pump business but have no clue how? Read on, and clear your doubts on how to start one as well as get a loan for your petrol pump!
indiagold team
29 Jun 2022
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The Oil & Gas industry is integral to the growth of almost every economy, and is India’s 8th-largest industry. India’s petroleum market is the most significant contributor to petroleum among non-OECD countries. Our consumption of oil-oriented products rose 3.7% in 2021, to 201.26 MMT. In 2021, India was the 3rd-largest consumer of oil.


According to India Energy Outlook 2021, India’s primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent, as the GDP is expected to reach USD 8.6 Tn by 2040! Some of India’s major oil and gas companies are Indian Oil Corporation Limited (IOCL), Oil and Natural Gas Corporation (ONGC), Bharat Petroleum, Gas Authority of India Limited (GAIL), Reliance Petroleum, and Hindustan Petroleum.


At the same time, CNG demand is also increasing as people move away from petrol/diesel-powered vehicles. According to a Business Standard report, India's gas market will triple by 2030. This is partly due to skyrocketing petrol and diesel prices, and people moving to cheaper alternatives. Also, as people shift towards cleaner options due to environmental changes, the surge in demand for CNG is inevitable. An increasing number of cab and auto drivers too are shifting to CNG, aiding in further growth of this segment.


Petrol and gas, however, remain modern-day necessities. Whenever you visit a pump, you’ll hardly see it without a queue. Several industries like chemicals, fertilisers and cosmetics also use petrol as a raw material.


And perhaps most evidently, increasing vehicle sales indicate that this sector will continue to remain lucrative. All statistics look pretty promising, so you should consider going ahead with your petrol pump business idea.


How? It’s simple, just read on!


Who all are eligible to start a petrol pump business?

Before learning how much a petrol pump business investment works out to or how to get a petrol pump business loan, it’s important to check whether you can even start one. Yes, not everyone is eligible! These are the criteria:


  • Applicant’s age should not be less than 21 years, and not more than 55.
  • The applicant should be a resident of India. If you are an NRI, you must have lived in India for more than 182 days in the last 12 months immediately preceding the date of application.
  • If you fall under the CC1 category, you must be 10th qualified. For the CC2 category, you must have completed your 10+2.
  • The applicant must have a 10+2 certification from a rural area, while the individual must have certification from a UGC-recognized university if they are from an urban area.
  • You are exempted from these rules if you are from the freedom fighter category.
  • The location of the pump must not fall in the list of excluded zones.

How to start a petrol pump business?

If you wish to start a petrol pump business, you have 2 choices:


Keep track of all Oil Marketing Companies' (OMC) advertisements in newspapers & online platforms.

While checking a website or ad, you’ll be able to identify the location and number of petrol pumps they want to be set up. If you find something viable for you, you may apply via the respective website. In case of several applications, the company may allot the pump based on lottery, bidding or draw of lots.


Do the following:

  • Create an account on Petrol Pump Dealer Chayan.
  • You will get a login ID and password, which you can use to apply for the petrol pump via the available advertisement.
  • Choose the pump location.
  • Register by clicking ‘Apply Now’.
  • Select the type of ownership, Individual or Partnership.
  • Fill the form with all required information.
  • Pay the fee of ₹10,000. And there you have it: application complete!

How can I apply for a petrol pump licence?

Once you are allotted a pump, you must apply for a petrol pump business licence:

  • You must complete a licence application form, which costs ₹100 in rural areas and ₹1000 in urban areas.
  • Once you get the licence, you need to get a GST number and pay GST from the petrol pump’s current account.

What is the ideal location to set up a petrol pump?

Every company has their own parameters when it comes to choosing land for a petrol pump. While going through the advertisement, check where the pump is to be opened with your sanctioned land. Only apply if it falls in the same area.


Outlets near highways are called regular retail outlets, while those far away from highways are called real rural outlets. These are the requirements for the land:


  • The applicant must own the land or have a lease for the same duration as the oil dealership.
  • The applicant must have all necessary documentation for the verification process.
  • The land should be greater than 800 m² in rural areas and more than 2000 m² in urban areas.
  • The ground should be levelled appropriately and reachable by road.

What certifications and permits are required for a petrol pump business?

While applying for a petrol pump business, you must have the following:

  • Certification of the location
  • Issued NOC from the concerned authority
  • Permission from the fire department and municipal corporation or equivalent authority of the state/city
  • Certificates and licences from all authorised bodies

How much investment do you need for a petrol pump business?

The following make up the investment requirement for a petrol pump:

  1. Licensing Fees
  • ₹16/KL for high-speed diesel of "B"/"DC" and ₹18/KL for Motor Spirit
  • ₹41/KL for high-speed diesel of "A"/"CC" and ₹41/KL for Motor Spirit
  1. Fixed Fees Before you begin construction, you must pay a fixed fee to the franchise company:
  • ₹15 lakh for a regular retail outlet, ₹5 lakh for a rural outlet if you own the land
  • ₹30 lakh for a regular retail outlet, ₹10 lakh for a rural outlet if the company owns the land You can pay this amount in bank deposits, mutual funds, bonds, national saving certificates, company shares, etc. IMPORTANT: You cannot pay via cash or jewellery.

How to get business investment for your petrol pump?

By now, it must be clear that petrol pumps require a hefty investment. If you do not have that kind of capital, we suggest going for a petrol pump business loan. Numerous banks and NBFCs provide loans. Banks offer several options in long-term loans, flexi loans, personal loans and gold loans. Choose wisely, as the choice of loan will impact your future livelihood.


Why should you go for a Gold Loan?

You can also go in for a petrol pump business loan in gold - we recommend this as many Indian households have gold lying idle in the form of jewellery. Almost never used, this gold can easily be leveraged to get an instant loan. One of the best options for this is indiagold, which provides easy, hassle-free gold loans at competitive interest rates.


Gold loans involve minimal documentation and have no CIBIL score requirement. The process is quick & hassle-free. Moreover, indiagold fully insures your gold and stores it safely in assigned bank lockers!


Conclusion

You must plan your business with full knowledge of legal and financial aspects. You can later also collaborate with private automobile operators and provide car cleaning services at your pump to scale up your business. You can also tie up with convenience store chains such as 24Seven to further popularise your business with residents of nearby localities. Such options have often proved to be profitable for petrol pump business owners.


Lastly, if you’re worried about a loan, relax and go for a gold loan from indiagold. Affordable, risk-free and at your doorstep - it’s fast, and will ensure you can get started with your business without delay.


And now, you’re ready to start your very own petrol pump business. All the best!

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