CNG Station Setup Cost in India: How to Start One as a Dealer
Published
7 min read
Contents 8 sections
- What does it cost to set up a CNG station, and who pays for what?
- How much land does a CNG station need?
- What do you pay the gas company before the first kg is sold?
- How much does a CNG pump earn per day and per year?
- How does a CNG station work, and what machinery does the plot need?
- Which approvals does a CNG station need, and in what order?
- What should you do before paying any fee?
- Frequently asked questions about starting a CNG station
CNG station setup cost has no fixed price in India, because the gas company decides what you pay for. You cannot buy a licence and open a pump on your own. The city gas distribution company authorised for your district advertises dealerships, and the model it offers sets your bill. Under some offers you bring only the plot and the civil work. Under others you also buy the compressor, storage and dispensers, and that is where the crore-level spending sits.
Every company asks for land and proof of capital first. Most want 900 to 1,200 sq m inside a city and at least 1,225 sq m outside it. The dealership documents we read set certified net worth at ₹1 crore to ₹2 crore, and fees before the first kg is sold run from ₹11,800 to ₹5 lakh or more. Your income is a commission on each kg sold, so volume at your site matters most.
What does it cost to set up a CNG station, and who pays for what?
In a dealer owned, dealer operated (DODO) station you own or lease the plot and run the outlet, while the gas company supplies the gas and the brand. What differs is how much equipment lands on your side of the line.
| Gas company and model | You pay for | The gas company pays for |
|---|---|---|
| Indraprastha Gas Limited (IGL), DODO in Delhi NCR | Land, permissions, civil construction, forecourt management, and a bank guarantee that protects IGL's equipment | Compressors, cascades and dispensers, their maintenance and the gas supply |
| GAIL Gas, full DODO | Land, civil and electrical works, compressor, cascade, dispensers, fire-fighting equipment, power connection, staff and permissions | The gas, with a dealer service charge per kg sold paid to you |
No dealership document we read gives a total project cost, and the figures circulating online come from consultancies and social posts, so test them. Price whatever your model leaves with you, then add civil work for your plot.
How much land does a CNG station need?
Land is stated as frontage and depth, and the numbers change with the company and the road.
| Gas company | Inside a town or city | Highway or outside municipal limits |
|---|---|---|
| IGL | 30 m x 36 m (1,080 sq m) | 35 m x 35 m (1,225 sq m) |
| GAIL Gas | 30 m x 30 m (900 sq m) | 35 m x 35 m, or 35 m x 45 m on a divided national highway |
| Jio-bp | At least 1,200 sq m | At least 3,000 sq m on a national or state highway |
The plot must be non-agricultural with a clear title. GAIL and Adani Gas both want 15 years of lease left on rented land. IGL issues its allotment letter only after a due diligence report confirms the title.
What do you pay the gas company before the first kg is sold?
Fees arrive in layers: a non-refundable application fee, a scrutiny or allotment fee, a refundable deposit and a bank guarantee.
| Gas company | Application fee | Other fees | Deposit and guarantee | Term |
|---|---|---|---|---|
| IGL | ₹50,000 | Scrutiny ₹50,000 plus GST; allotment fee ₹3 lakh plus GST, or ₹5 lakh in Delhi, Gautam Budh Nagar, Ghaziabad and Gurugram | Interest-free deposit equal to 5 days' average sales; bank guarantee of 15% of the equipment's price | 20 years, then 10-year renewals |
| GAIL Gas | ₹11,800 with tax | None listed | ₹5 lakh interest-free deposit; bank guarantee of about seven days' sales at 2,000 kg a day | 15 years, then 5-year renewals |
IGL asks for ₹2 crore certified by a government-approved valuer, counting land and machinery at 50% of value and bank deposits, shares and bonds at 80%. GAIL Gas asks for ₹1 crore of net worth as of the previous 31 March, so an applicant worth ₹1.5 crore could clear one test and not the other. GAIL also forfeits 10% of the deposit if financing is not closed within six months of the allotment letter.
How much does a CNG pump earn per day and per year?
No gas company publishes its per-kg commission. IGL sets it in rupees per kg, varies it by area at its discretion and also charges dealers a per-kg station licence fee. GAIL Gas notifies its rate by area.
The arithmetic is simple. GAIL sizes its bank guarantee on 2,000 kg a day, which makes a fair yardstick for a good site (it is a planning figure, not a forecast). At that volume each ₹1 of commission per kg earns ₹2,000 a day, or about ₹7.3 lakh a year (2,000 kg x 365 days). Costs and any licence fee come out of that, so it is a gross figure.
Volume is the real risk. IGL raised Delhi-NCR CNG prices by ₹3.89 a kg on 29 August 2026, citing higher imported liquefied natural gas (LNG) costs. When CNG's saving over petrol narrows, the volume at your station takes the hit, not the commission rate. India had more than 8,150 CNG stations in August 2025, with over 18,000 targeted by 2030, so expect neighbours. If the road is heading towards electric vehicles, read our guide on the EV charging station franchise before signing a long lease.
How does a CNG station work, and what machinery does the plot need?
- Gas arrives by pipeline, or by trucked cascade at sites far from one.
- A dryer and filter take out moisture and sulphur so the gas meets IS:15490, the standard the Petroleum and Explosives Safety Organisation (PESO) works to, as its CNG station guidance shows.
- The compressor raises the pressure to about 200 kg/cm2, the level IndianOil gives for dispensing CNG.
- Storage cylinders in a cascade hold the compressed gas, so filling does not wait for the compressor.
- Dispensers fill the vehicle's cylinder through hoses built for that pressure.
| Equipment | What it does | What to check |
|---|---|---|
| Compressor | Raises line pressure for storage and dispensing | IGL supplies it; under GAIL's full DODO you buy it |
| Cascade | Stores compressed gas | Safety distance follows the total water capacity of all cascades: 2.5 m up to 4,500 litres, 4 m up to 10,000 litres, 10 m up to 100,000 litres |
| Dispensers and hoses | Fill vehicles | PESO-approved equipment, with CNG-compatible hoses and gaskets |
For related routes, see the compressed biogas plant guide and our renewable energy business ideas.
Which approvals does a CNG station need, and in what order?
Under IGL's guidelines the dealer obtains the permissions in IGL's name, so you own the plot and forecourt, not the licence.
- Win the allotment letter. IGL advertises in national English and Hindi newspapers and on its website for about three weeks.
- Prepare a site plan and a scaled layout showing the licensed area and everything within 100 m of it.
- Obtain a No Objection Certificate from the District Authority, based on that site plan.
- Get plans and specifications approved by PESO, which charges a scrutiny fee.
- Build, then pass the PESO inspection. The licence takes effect only after the authority endorses it.
What should you do before paying any fee?
- Find the city gas company working in your district and watch its website and newspaper notices.
- Write to the company for the current per-kg commission, the station licence fee and the exit terms of the agreement. Then rerun the earnings arithmetic at half of 2,000 kg a day and see whether the loan still gets repaid.
If a bank is funding the plot work and equipment, it will want a project report built on the allotment terms. An NPCS project report (our detailed project report guide shows the layout) sets out volume scenarios, commission, running costs and repayment over the lease term.
Frequently asked questions about starting a CNG station
Is a CNG station business profitable?
It can be, but only above a certain volume. Income is a per-kg commission, so a site selling 2,000 kg a day earns about ₹7.3 lakh a year for every ₹1 of commission, before costs and any licence fee.
How much profit is there in 1 kg of CNG?
Only the gas company can tell you, because the commission is set in rupees per kg, differs by area and changes at its discretion. The IGL and GAIL Gas documents leave the figure out, so get the rate in writing and subtract any per-kg licence fee.
Which CNG dealership is best?
None is best everywhere, because you can apply only to the company working in your district. Compare the equipment you buy, the net worth test, the deposit, the lease length and the commission per kg. The tables above show how IGL and GAIL Gas differ on most of these.
Can I open a CNG station without owning land?
Not as a dealer. Every dealership document we read expects you to bring the land. Retired defence officers sponsored through the Directorate General Resettlement can run IGL's company-operated stations on yearly contracts for up to five years, when IGL requests nominations.
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