What is the kerosene distribution opportunity in India?

A licensed fuel distribution business targeting households and institutions in tier-2/3 cities where LPG shortages are frequent. Distributors procure kerosene from Oil PSUs at ₹40–50/litre wholesale and retail at ₹50–60/litre, with margin of ₹2–4/litre. Government policy recognizes kerosene as critical LPG alternative, ensuring sustained demand.

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

₹25–40 lakh MVP: Storage infrastructure (₹8–12L), licensing permits (₹3–5L), initial inventory ₹8–10L, 2–3 vehicles (₹6–8L), tech platform (₹2–3L). Add ₹10–15L for working capital before first revenue cycle (30–60 days).

Is kerosene distribution profitable in India?

Yes. At scale (50–100 lakh litres/year), gross margin = ₹1–4 crore. Net profit (after operations, delivery, licenses) = 15–25%, or ₹25–80 lakh annually. Delivery subscription + B2B contracts add 20–30% margin. Break-even in 10–14 months.

What regulations apply to kerosene distribution in India?

Petroleum Act 1934 (mandatory license); LPG Regulation Rules 2016; GST 5%; State Excise duty (varies 0–20% by state); PESO storage tank certification; DGMS safety compliance; OMC dealer agreement with IOCL/BPCL/HPCL. State petroleum board approval required before operations.

Kerosene Distribution Business India 2026 — LPG Alternative

AI SummaryThe kerosene distribution market in India is worth ₹15,000–20,000 crore annually and is growing 4–6% per year as LPG shortages persist in tier-2 and tier-3 cities. In 2026, government energy policy explicitly recognizes kerosene as a critical alternative fuel, creating formal demand channels that didn't exist 5 years ago. Entrepreneurs with ₹25–40 lakh capital, fuel distribution experience, and ability to navigate petroleum licensing should target underserved regions where LPG penetration is low and shortage frequency is documented (Rajasthan, Odisha, Madhya Pradesh, parts of Uttar Pradesh). Margins of ₹2–4 per litre and 15–25% net profit potential make this a scalable distribution play with regulatory tailwinds.