Opening petrol pumps in India is the dream of many people. It is not only a respectable business, but it can also become a source of stable income. But do you know how much it costs to start this business and how much profit is given on selling a liter of petrol? Come, in this article we understand the complete information of this business in a simple and interesting way.

Cost of starting petrol pump: how much money is needed?

Starting a petrol pump is not a small task. For this you need a hefty amount and the right plan. The total cost of opening a petrol pump depends on several factors, such as the location, the size of the land, and the company (eg Indian Oil, Bharat Petroleum, or Hindustan Petroleum). If you have your own land, the cost may be less, but if you have to buy the land, then the cost increases.

Petrol pumps in urban areas require at least 800–1200 square feet of land, while in rural areas it can be up to 1200-1500 square feet. Except for the price of land, machinery, tanks, licenses, and other necessary facilities for installation of petrol pump can cost from Rs 50 lakh to Rs 1 crore. Apart from this, the oil company may have to pay Rs 10-25 lakh as security deposit. Overall, if you do not have your own land, this expenditure can reach Rs 2-3 crore.

How much profit on selling petrol and diesel?

The real earnings of running a petrol pump are done from the commission. The pump owner gets a certain commission on the sale of every liter of petrol and diesel. Currently, there is a commission of about Rs 3.5-4 on a liter of petrol and Rs 2.5-3 on diesel. This commission may change slightly depending on the oil company and the location of the pump.

Suppose, your petrol pump sells 5000 liters of petrol and 3000 liters of diesel per day. Accordingly, your daily earnings can be Rs 17,500 (petrol) + Rs 7,500 (diesel) = Rs 25,000. This amount can reach Rs 7-8 lakh in a month. However, after taking out expenses like salary, electricity bill, and maintenance of employees, net profits can remain Rs 2-4 lakh per month.

Is this business right for you?

Opening a petrol pump is a major investment, but it can give long -term stable income. For this, you have to complete the conditions of oil companies, such as minimal educational qualification, financial status, and license process. In addition, the selection of the location is very important. Petrol pumps located on highway or busy roads earn more.

Challenges and precautions

The challenges in this business are also no less. It is necessary to follow oil prices fluctuations, competition, and government rules. Also, you have to provide better service to customers, such as clean toilet, digital payment, and quick service. A mistake can harm your credibility.