What Is the Procedure for Opening a Petrol Pump? Complete Step-by-Step Guide for New Entrepreneurs

Let’s be honest. In India, owning a petrol pump is seen as the ultimate “Seth-ji” business.
It’s a symbol of stability.
While restaurants might fail and tech startups might crash, vehicles will always need fuel. Whether it’s a truck carrying goods from Kashmir to Kanyakumari or a scooter rider going to the office, everyone stops at a petrol pump.

This makes it a recession-proof business.
But here is the catch: It is also one of the hardest businesses to start.
You can’t just rent a shop and start selling petrol. You need government permissions, oil company licenses, and a significant amount of capital.

Many people have land but don’t know the process. Others have money but don’t have land.
If you are serious about entering this high-cash-flow industry, you need to understand the rules of the game.

In this guide, I will walk you through the entire journey—from applying online to filling the first tank. No complex jargon, just the reality of what it takes to become a petrol pump dealer in India in 2024.

Phase 1: Understanding the Game (The Oil Companies)

In India, three major Public Sector Undertakings (PSUs) control 90% of the market:

1. IOCL: Indian Oil Corporation Limited.
2. BPCL: Bharat Petroleum Corporation Limited.
3. HPCL: Hindustan Petroleum Corporation Limited.

There are private players too (Reliance-BP, Shell, Nayara Energy), but their process is different. For this guide, we will focus on the PSU giants because they offer the most dealerships.

The “Chayan” Portal:
Gone are the days when you had to bribe someone or have political connections to get a pump. Today, the process is transparent.
All three companies use a single website:
You cannot apply offline. You must wait for an advertisement on this portal.

Phase 2: The Two Types of Dealerships

Before you check your bank balance, check which category you fit into.

1. Regular Retail Outlet (RO):
These are pumps on highways (NH/SH) and urban/semi-urban areas.

• Cost: High.
• Land: Must be large (1200 sq meters or more).

2. Rural Retail Outlet (Kisan Seva Kendra):
These are pumps in villages or remote areas to help farmers.

• Cost: Lower.
• Land: Smaller plots are accepted.

Phase 3: Eligibility (Can You Apply?)

The oil companies have strict criteria. You must tick these boxes:

1. Citizenship: You must be an Indian Citizen. (NRI living in India is fine, but you must be a resident).
2. Age: Between 21 and 60 years.
3. Education:
   • For General Category: Minimum 12th Pass.
   • For SC/ST/OBC: Minimum 10th Pass.
   • For Freedom Fighters: No minimum qualification.
4. Freedom from Law: You should not have any criminal record.

The “Land” Criterion:
This is the most critical part. You can apply in two ways:

• Applicant with Land: You already own a suitable plot.
• Applicant without Land: You don’t own land, but you are willing to buy/lease it if you win the dealership. (Note: Having land gives you a massive preference.

Phase 4: The Investment (The Real Numbers)

“How much money do I need?”
It varies, but let’s look at a realistic breakdown for a standard highway pump.

1. License Fee & Deposit:

• To apply: ₹1,000 (Rural) to ₹10,000 (Urban).
• Security Deposit (After selection): ₹1 Lakh to ₹5 Lakhs, depending on the company.

2. Infrastructure Cost (The Big One):
If you are a “Dealer Owned Dealer Operated” (DODO) dealer, you have to build everything.

• Levelling the Land: ₹2-5 Lakhs.
• Canopy (The Roof): ₹10-15 Lakhs.
• Office Building & Toilets: ₹5-8 Lakhs.
• Driveway (Concrete): ₹10-15 Lakhs.
• Tanks & Pumps: Usually provided by the Oil Company, but sometimes you pay for installation.

3. Working Capital:
You need to buy fuel upfront. A tanker of petrol costs lakhs. You need cash flow to keep the tanks full while waiting for daily sales.

• Estimated Working Capital: ₹15-20 Lakhs.

Total Estimate: ₹50 Lakhs to ₹1 Crore (excluding land cost).

Note: For SC/ST category applicants under the “Corpus Fund Scheme,” the Oil Company might build the pump for you. You just need working capital.

Phase 5: The Step-by-Step Application Process

Step 1: The Advertisement
Keep checking the Chayan portal or newspapers. Companies release ads state-wise. “Wanted: Dealers in Pune District.”

Step 2: Online Application
Register on the portal. Select the specific location (e.g., “Within 2km of Milestone 45 on NH-48”). Upload your details. Pay the fee.

Step 3: The Lottery (Bidding)
If there is only one applicant (You), you win automatically.
If there are multiple eligible applicants, a Computerised Draw of Lots (Lottery) happens.
This is the fairest part. Rich or poor, everyone has the same luck.

Step 4: Document Verification
If you win the lottery, you have to submit physical documents.

• Land papers (7/12 extract, Title deed).
• Financial proof (Bank statements, CA certificate).
• Affidavits.

Step 5: Field Verification (LEC)
A “Land Evaluation Committee” from the oil company will visit your site.
They check:

• Is the land really on the highway?
• Are there high-tension wires above? (Not allowed).
• Is there an intersection nearby? (Safety hazard).

Phase 6: The “NOC” Struggle (Bureaucracy)

Congratulations, the Oil Company selected you!
Now starts the hardest part: Government Permissions.
You need a “No Objection Certificate” (NOC) from multiple departments before you can lay a single brick.

1. District Magistrate (DM/Collector): The final boss.
2. Police Commissioner: For safety/traffic.
3. PWD / NHAI: For access from the road.
4. Fire Department: Fire safety clearance.
5. Forest Department: If you cut trees.
6. Electricity Board: For power connection.

This process can take 3 to 6 months. You need patience (and sometimes a good consultant) to navigate this.

Phase 7: Profitability (Is it Worth It?)

After spending ₹1 Crore, what do you get?
Petrol pumps don’t have an MRP profit. They have a Dealer Commission.

Current Commission Rates (Approx):

• Petrol: ₹3.00 to ₹3.50 per litre.
• Diesel: ₹2.00 to ₹2.50 per litre.

The Math:
Let’s say your pump is on a decent highway.

• Daily Sale: 3,000 Litres (Petrol + Diesel mix).
• Average Commission: ₹2.50.
• Daily Gross Profit: ₹7,500.
• Monthly Gross Profit: ₹2,25,000.

Expenses:

• Staff Salaries (4 boys, 1 manager): ₹60,000.
• Electricity (24/7 lights/pumps): ₹20,000.
• Evaporation Loss (Fuel evaporates!): ₹5,000.
• Maintenance: ₹5,000.

Net Monthly Profit: ₹1 Lakh to ₹1.5 Lakhs.
(This can double if you have high sales or add a CNG station/Charging Point).

Conclusion: A Legacy Asset

Opening a petrol pump is not a “Get Rich Quick” scheme. It is a slow, capital-heavy, bureaucratic process.
But once it is open? It is a goldmine.
It is a business you can pass down to your children. The land value appreciates. The fuel demand is constant.

If you have the land and the courage to handle the paperwork, don’t hesitate. Watch the portal. Your location might pop up tomorrow.

FAQ: Questions Beginners Ask

Q1: Can I open a pump on agricultural land?
A: Yes, but you must convert it to “Non-Agricultural” (NA) use. This conversion happens at the Collector’s office after you get the “Letter of Intent” (LOI) from the oil company.

Q2: Can I start a private pump (Shell/Nayara)?
A: Yes. Private companies don’t use the Chayan portal. You apply directly on their websites. Their investment is usually higher, and they look for premium locations, but their service standards are better.

Q3: What if I lose the lottery?
A: You lose the application fee (₹1,000). That’s it. You can apply again when a new ad comes for a different location.

Q4: Is EV Charging a threat?
A: Not yet. But smart dealers are installing EV Charging Stations at their petrol pumps. It future-proofs your business. You become an “Energy Station,” not just a petrol pump

1. Best business loan Options 2026 for New Entrepreneurs?
2. https://connecteam.com/how-to-start-a-gas-station/

Disclaimer: This article is for informational purposes only. Rules and fees are subject to change by OMCs. Please check the official portal for the latest updates.”