The liner of CNG pressure vessel was manufactured using a deep drawing and ironing (D.D.I.) process with a single punch. Tip clearance between billet and die suggested in the actual field has been widely used to reduce forming load and to improve die life. However, the analysis and design of tip clearance is necessary for the third stage of forming defect. In this study, the tip clearance of the third stage was determined to limit the ratio of reduction of cross-sectional area based on theoretical analysis. The proposed tip clearance was verified via finite element analysis. In addition, the simulation technique was established by comparing the forming load based on theoretical calculation with the load determined via FEM.