What is commercial LPG distribution in India?

It is the B2B supply and logistics of liquified petroleum gas to commercial establishments (hotels, restaurants, bakeries, canteens). Distributors source from government refiners, manage regulatory compliance (PNG applications), and handle last-mile delivery. India's commercial LPG market is experiencing 20% supply expansion as of March 2026, driven by resumed Iranian oil imports and state-level demand.

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

₹40–60 lakh for MVP: Warehouse (₹5L), storage tanks & safety infrastructure (₹8L), 3–4 delivery vehicles (₹15L), PESO licensing & compliance (₹3L), mobile app (₹8L), working capital (₹12L). Larger operations scale to ₹1.5–2 crore across 2–3 states.

Is commercial LPG distribution profitable in India?

Yes. Margin per cylinder: ₹25–50 × 50,000 cylinders/month = ₹12.5–25 lakh. PNG facilitation fees: ₹500–1,000 × 1,000 clients/month = ₹5–10 lakh. Annual net profit: ₹30–60 lakh (30–40% ROI). Scale to 5 states for ₹2–3 crore annual EBITDA within 3 years.

What regulations apply to LPG distribution in India?

Petroleum Act 1934 (Section 5): dealer license mandatory from state petroleum department. PESO Regulations: storage, handling, safety inspections quarterly. GST 5% on LPG supply. PNG approval via GAIL/state utility (varies by state). Public Liability Insurance ₹1–2 crore. FSSAI clearance if supplying food-service customers.

Commercial LPG Distribution Business India 2026 — Startup Guide

AI SummaryCommercial LPG distribution represents a ₹8,500–12,000 crore market opportunity in India as of March 2026, driven by a 20% state-level supply boost and mandatory PNG compliance for 2.5M+ commercial establishments. Distributors can capture ₹30–60 lakh annual profit per state by aggregating wholesale allocation from IOCL/BPCL/HPCL, managing PNG facilitation, and operating delivery logistics. Timing is critical: Iranian oil sanctions relief signals stable sourcing; PNG rollout creates compliance friction that third-party aggregators can monetize. Ideal for logistics entrepreneurs, fuel traders, and retail operators with capital and local networks in Tier-2 cities.