State-owned Indian Oil Corporation has launched a strategic initiative to diversify its revenue streams beyond traditional fuel sales. According to reports from Business Standard, the oil marketing company has invited expressions of interest from aggregators to manufacture, distribute and roll out its own packaged drinking water brand across its nationwide retail network. This move represents a significant shift for the state-owned refiner as it seeks to increase non-fuel revenue through value-added products, with the initiative specifically targeting 43,603 retail outlets across India. The company aims to enhance non-fuel revenue from ₹200 crore to ₹760 crore, with a targeted GMV of over ₹11,000 crore.
The company operates approximately 43,603 retail outlets across India, with 21,435 locations strategically positioned on national and state highways. As reported by Business Standard, IndianOil plans a phased rollout approach, starting with highway retail outlets before expanding to urban, semi-urban and rural locations. The aggregator-led model will manage manufacturing, quality assurance, supply chain, logistics and rollout, while IndianOil retains exclusive ownership of the brand, trademarks, artwork and packaging designs. The network includes company-owned and operated outlets, dealer-operated outlets and Kisan Seva Kendras, with highway outlets receiving priority due to higher demand for drinking water among customers on the move. The company has 195 million sq. ft. of retail space and over 3.2 crore customers visit the facilities daily.
The initial product portfolio will feature packaged drinking water in PET bottles of 250 ml, 500 ml and 1 litre, with the 1-litre bottle positioned as the lead product. According to the EOI, tentative consumer prices have been set at ₹6 for 250 ml, ₹10 for 500 ml and ₹20 for 1 litre, inclusive of goods and services tax. However, the EOI document indicates these figures are indicative and may be revised at the bid stage. The company has indicated potential expansion to premium water, natural mineral water, alkaline water and functional hydration products, subject to technical feasibility and regulatory compliance. The packaged drinking water market is expected to reach ₹32,040 crore by 2032, according to India Brand Equity Foundation studies.
The proposed arrangement includes a dealer margin of 25-35 per cent of the maximum retail price excluding GST, with IndianOil retaining at least 12 per cent revenue share of the Dealer Landed Price. As reported by Business Standard, the aggregator will handle manufacturing through facilities approved by IndianOil, procure packaging materials, manage production planning, warehousing, transportation, inventory management and service designated retail outlets. The aggregator will also bear the cost of visi-coolers and recover it from its share of the Dealer Landed Price. The proposed arrangement is a multi-year, revenue-sharing model with an initial contract period of five years, followed by two-year extensions based on performance review. The EOI is confined to fuel outlets covering all categories from company-owned, company-operated (COCO), dealer-owned, dealer-operated to Kisan Seva Kendras.
The proposed arrangement is currently restricted to IndianOil's designated retail outlets and excludes LPG distributorships, institutional customers, IndianOil offices, joint ventures, subsidiaries, e-commerce and general trade. According to Business Standard, IndianOil has retained the option to extend the engagement to other channels at a later stage. The company has not completed a nationwide launch as of now, with the rollout in phases eventually covering all 43,603 outlets. IndianOil has partnered with multiple brands for non-fuel revenues, including Hindustan Unilever, Dabur, ICICI Bank, Ferns & Petals, MTR Foods and PVR Cinemas. The company may later expand the portfolio to include premium water, natural mineral water, alkaline water, functional hydration products and additional pack sizes, subject to technical feasibility and regulatory requirements.
