How Much Profit Does a CNG Pump Franchise Make in India?

 

As India accelerates its shift toward clean and sustainable fuels, Compressed Natural Gas has become one of the most promising energy alternatives. This transition has opened up significant opportunities for entrepreneurs looking to invest in the CNG pump franchise business. But one of the most common questions potential investors ask is:


Let’s explore the investment, operating costs, and expected returns in detail.

1. Understanding the CNG Pump Franchise Model

A CNG pump franchise operates under a license from a major energy company such as:

  • Indraprastha Gas Limited (IGL)

  • Mahanagar Gas Limited (MGL)

  • GAIL Gas Limited

  • Adani Gas

  • Bharat Petroleum (BPCL) or Indian Oil (IOCL)

These companies provide the infrastructure support, CNG supply, and branding, while the franchise owner handles local operations, staffing, and maintenance.

2. Initial Investment Requirements

The cost of setting up a CNG fuel station depends on location, size, and whether it’s a mother station, daughter booster station, or online station.

Type of StationEstimated Investment (INR)Land Area Required
Online Station₹70 – ₹90 Lakhs600–1000 sq. m.
Daughter Booster Station₹60 – ₹80 Lakhs500–800 sq. m.
Mother Station₹1.2 – ₹2 Crore1000–1500 sq. m.

💡 Note: The investment may include compressor units, dispensers, civil work, storage cascades, and licensing fees.

3. Operating Costs

Running a CNG franchise involves recurring expenses such as:

  • Electricity & Maintenance: ₹50,000 – ₹1,00,000/month

  • Staff Salaries: ₹60,000 – ₹1,50,000/month

  • Administrative & Misc. Costs: ₹30,000 – ₹60,000/month

Total monthly operational expenses generally range between ₹1.5 to ₹3 lakhs.

4. Revenue & Profit Calculation

The profit depends primarily on sales volume and margin per kg of CNG sold.

ParameterTypical Range
Average Selling Price of CNG₹75 – ₹85 per kg
Franchise Commission / Margin₹3 – ₹5 per kg
Average Daily Sales3,000 – 5,000 kg

Example Calculation:    

If a station sells 4,000 kg/day with a margin of ₹4/kg:

  • Daily Profit: 4,000 × ₹4 = ₹16,000

  • Monthly Profit: ₹16,000 × 30 = ₹4,80,000

  • Net Monthly Profit (after expenses): ₹4.8 lakh – ₹2 lakh ≈ ₹2.8 lakh/month

That’s an annual profit of ₹30–35 lakh, depending on sales and location.

5. Factors Influencing Profitability

  1. Location: Stations near highways, urban centers, or industrial hubs see higher demand.

  2. Gas Supply Source: Mother stations typically yield higher margins due to direct connection to gas pipelines.

  3. Operational Efficiency: Minimizing downtime and optimizing compressor usage increases throughput.

  4. Brand & Support: Partnering with reputed CNG suppliers ensures stable fuel delivery and trust.

6. Payback Period and ROI

Most CNG franchises recover their investment within 3–5 years.
Typical ROI (Return on Investment) is between 25%–40% per year, depending on volume and operational efficiency.

7. Future Outlook

India’s government aims to expand the CNG network to over 10,000 stations by 2030, driven by:

  • Rising adoption of CNG vehicles

  • Cleaner fuel policies

  • Increasing urban demand

This means CNG franchises will continue to be high-potential, low-risk, and sustainable investments in the clean energy sector.

Conclusion

Starting a CNG pump franchise in India is not just a business — it’s an investment in the nation’s green future. A CNG franchise  can generate monthly profits between ₹2 to ₹5 lakhs, depending on sales, location, and setup type. With growing demand for eco-friendly fuels and government support, this business model offers a strong, long-term return for investors focused on sustainability and profitability.


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