Shares of ONGC and Oil India surged up to 9% after the Indian government reduced royalty rates on crude oil and natural gas production to encourage higher domestic output.
The policy aims to support upstream oil and gas companies by lowering their operational costs and improving profitability. Officials said the revised structure is designed to boost exploration, attract investment, and increase India’s energy production.
Under the new framework, royalty rates have been rationalised across onshore, offshore, and deepwater fields. Offshore and gas production rates have been reduced, while some categories now offer lower or phased royalty charges.
Market analysts say the move could significantly benefit state-run producers like ONGC and Oil India, improving cash flows and encouraging fresh investment in difficult exploration areas.
Following the announcement, both companies saw strong buying interest on the stock market, reflecting investor optimism about higher earnings potential.
The government’s decision is part of a broader push to reduce India’s dependence on imported crude oil and strengthen domestic energy security through increased local production.