What is commercial LPG distribution for hotels in India?

Commercial LPG distribution is the bulk supply of liquefied petroleum gas to hotels, restaurants, and institutional canteens via licensed dealerships. As of March 2026, the Indian Government increased commercial LPG allocation by 20% to 50%, reflecting supply constraints in the hospitality sector. Distributors act as intermediaries between oil marketing companies (OMCs) and end-user establishments, ensuring reliable, consistent supply.

How much does it cost to start LPG distribution in India?

₹25–40 lakh: LPG storage facility with safety certification (₹15–20 lakh), PESO and DGFT licensing (₹3–5 lakh), working capital for initial inventory (₹5–10 lakh), and team setup (₹2–5 lakh). Costs vary by state, location proximity to OMC depot, and storage capacity (5–10 MT for entry-level operations).

Is LPG distribution profitable in India?

Yes. Distributors earn ₹2–4 per kg margin on bulk supply (50–100 MT/month = ₹1–4 lakh/month gross), plus compliance audit fees (₹25–75 lakh/year across 50–100 clients). Total annual EBITDA for a mid-scale operation: ₹20–40 lakh. Payback: 12–18 months. Growth accelerated post-March 2026 government allocation increase.

What regulations apply to LPG distribution in India?

DGFT registration (Directorate General of Foreign Trade); PESO certification (Petroleum & Explosives Safety Organisation, mandatory for storage facilities); GST 5% on LPG supply; local municipality fire/safety permits; OISD (Oil Industry Safety Directorate) bulk storage compliance; OMC dealership agreement. Non-compliance risks fines up to ₹10 lakh and license cancellation.

Commercial LPG Distribution Hotels India 2026 Guide

AI SummaryCommercial LPG distribution for hotels and canteens is a ₹8,000–12,000 crore annual opportunity in India, newly catalyzed by the Government's March 2026 decision to increase allocation by 20%. The hospitality sector (5 lakh+ hotels and canteens) faces recurring supply shortages; licensed bulk distributors can capture ₹1–4 lakh monthly margins per location. Entrepreneurs with access to OMC partnerships and storage infrastructure can achieve 12–18 month payback. Best suited for logistics-savvy professionals, operations managers, and regional fuel traders.