The outbreak of the COVID-19 pandemic exposed critical gaps in healthcare infrastructure across the globe. One of the most urgent needs during the crisis was the supply of medical-grade oxygen. In India and many other countries, hospitals faced severe shortages. This urgent demand spotlighted the oxygen gas plant industry, turning it into a lucrative and essential business opportunity. Starting an Oxygen Gas Plant today is not just profitable—it’s socially impactful and future-resilient.
Why the Oxygen Gas Plant Business is Booming Post-COVID
The demand for medical oxygen surged during the pandemic, especially during the second wave in India. While the crisis has now subsided, the need for reliable and readily available oxygen has not. Hospitals, clinics, industrial setups, and even smaller healthcare centers are now stockpiling oxygen supplies. Government initiatives have also started funding oxygen plants in remote and rural areas. Additionally, industries such as welding, steel manufacturing, glass production, pharmaceuticals, and wastewater treatment are traditional consumers of oxygen gas, ensuring long-term demand beyond the healthcare sector.
Market Potential and Industry Growth
The oxygen gas market in India alone is expected to grow at a CAGR of 6-8% in the coming years. Globally, the industry is forecasted to reach over USD 40 billion by 2027. The COVID-19 pandemic catalyzed this growth, with governments and private players focusing on setting up localized oxygen gas plants to avoid reliance on transported liquid oxygen. Moreover, the Make in India initiative is pushing domestic manufacturing, providing an added advantage to new entrants in the oxygen business.
Types of Oxygen Gas Plants
Before venturing into this business, it’s crucial to understand the types of oxygen gas plants available:
- PSA (Pressure Swing Adsorption) Oxygen Plants: These are widely used in hospitals. They separate oxygen from atmospheric air and produce medical-grade oxygen with over 90% purity.
- Cryogenic Oxygen Plants: Suitable for large-scale production, these plants work on the principle of distilling liquefied air and are ideal for industrial purposes.
- Liquid Oxygen Plants: These produce liquid oxygen, mainly for transportation and long-term storage purposes.
Each type of oxygen gas plant serves a specific need, and your choice will depend on your target market, investment capacity, and production scale.
Investment and Setup Cost
The cost of setting up an oxygen gas plant can vary widely depending on the type and capacity. Here’s a general overview:
- Small-Scale PSA Oxygen Plant (20-50 LPM): ?25 lakh to ?50 lakh
- Medium-Sized Plant (100-500 LPM): ?50 lakh to ?1.5 crore
- Large Cryogenic Plant (5–50 TPD): ?5 crore and above
Other costs include land acquisition or leasing, building infrastructure, installing machinery, securing licenses, hiring skilled technicians, and ensuring 24/7 power supply.
A well-planned plant can achieve ROI within 1.5 to 3 years, depending on local demand and operational efficiency.
Licensing and Regulatory Requirements
Since oxygen is considered a medical and industrial gas, you must obtain specific licenses and approvals:
- PESO (Petroleum and Explosives Safety Organization) approval
- Pollution control board clearance
- Drug license for medical-grade oxygen
- Factory license and labor law compliance
- BIS certification for quality assurance
Additionally, safety protocols and emergency systems must be installed to avoid leaks or explosions.
Key Machinery and Equipment
To run an oxygen gas plant efficiently, investing in high-quality machinery is vital. Here’s what you’ll need:
- Air compressor
- Air purification unit
- PSA/Cryogenic modules
- Oxygen storage tanks (cylindrical or liquid tanks)
- Gas filling stations
- Control panels and automation systems
- Quality testing units
Invest in automated systems for better safety and efficiency, especially for hospitals that rely on uninterrupted oxygen supply.
Manpower and Technical Expertise
Setting up an oxygen gas plant also involves hiring skilled manpower. You’ll need:
- Plant operator and technicians
- Quality control and lab staff
- Safety officers
- Delivery and logistics team
- Maintenance personnel
Invest in proper training and certification, especially if you’re supplying to hospitals, where precision and quality cannot be compromised.
Supply Chain and Distribution
Your distribution model will depend on whether you plan to sell in gaseous or liquid form. Partnering with:
- Hospitals and clinics
- Government health departments
- Industrial buyers (steel, pharma, textiles)
- Medical supply companies
- Retail distributors
can ensure consistent sales. Creating your own network of delivery vehicles and refill stations can boost your revenue further.
With COVID-19 making oxygen plants a national priority, many state governments and NGOs are now offering subsidies, incentives, and low-interest loans for businesses in this sector. This is the perfect time to step in.
Profit Margins and Revenue Streams
An oxygen gas plant typically enjoys high profit margins due to low raw material costs—the primary input is atmospheric air. Here’s a breakdown of potential revenue:
- Medical oxygen cylinder (46.7L): ?300 – ?500 each
- Industrial oxygen cylinder: ?150 – ?250 each
- Bulk liquid oxygen supply: ?10 – ?25 per liter
Daily production capacity of even a small plant (100 LPM) can fill around 14–15 cylinders, generating ?5,000 – ?10,000/day. Large-scale plants can easily generate monthly revenue in crores depending on contracts and distribution.
Diversify your offerings—add nitrogen, argon, or hydrogen gas production later to increase profitability and become a multi-gas supplier.
Challenges and Risk Management
Like any business, this one comes with risks:
- Technical failure or leakage risks
- Licensing delays and inspections
- Price fluctuations due to demand-supply shifts
- Strict health and safety regulations
- Need for uninterrupted power supply
These can be managed with proper planning, trained staff, quality machinery, and regular audits. Investing in insurance coverage for the plant and employees is a wise step.
Future Scope and Innovation
With rising healthcare awareness and the government’s push for self-reliance, the future of the oxygen gas plant industry is bright. Upcoming trends include:
- Solar-powered oxygen plants in rural hospitals
- Mobile oxygen generation units for disaster zones
- Integration with IoT for remote monitoring
- Modular PSA plants for plug-and-play deployment
Entrepreneurs who innovate and provide efficient, sustainable solutions will find success in this space. Hospitals, industries, and governments will continue to rely on dependable oxygen suppliers well beyond the pandemic era.
Conclusion
Starting an oxygen gas plant in the post-COVID era is not just a profitable venture—it’s a business that saves lives and builds national resilience. With the right investment, licensing, and marketing strategy, entrepreneurs can carve out a successful, sustainable niche in this critical industry. As demand continues to rise across medical and industrial sectors, the time to act is now.
Invest smart, serve responsibly, and contribute to a healthier, safer future—one cylinder at a time.
Visit the page Select and Choose the Right Business Startup for You for sorting out the questions arising in your mind before starting any business and know which start-up you can plan.
We, at NPCS, endeavor to make business selection a simple and convenient step for any entrepreneur/startup. Our expert team, by capitalizing on its dexterity and decade’s long experience in the field, has created a list of profitable ventures for entrepreneurs who wish to diversify or venture. The list so mentioned is updated regularly to give you a regular dose of new emerging opportunities.
