India must intensify efforts to increase domestic oil production to address its heavy import dependence, which currently stands at 88%. The recent fluctuation in global oil prices—briefly spiking to $81 a barrel before settling around $67 following U.S. strikes on Iranian nuclear facilities and a fragile ceasefire—highlights the vulnerability of oil-importing nations like India to global geopolitical tensions. Even as oil supply remains sufficient, price volatility is expected to persist, prompting energy producers, including the U.S., to ramp up domestic production.
For India, which has seen a steady decline in domestic oil output since FY12, reversing this trend is critical. Key challenges include outdated regulations, high taxes, ageing fields, and limited deep-water exploration capabilities. Moreover, no major hydrocarbon discoveries have been made recently.
The government is taking steps to address this. The recently enacted Oilfields (Regulation and Development) Amendment Act, 2025 aims to attract both domestic and international investment into exploration and production (E&P). According to Petroleum Minister Hardeep Singh Puri, the goal is to increase exploration acreage to 1 million sq. km by 2030, including in areas that were previously classified as no-go zones. Encouragingly, 38% of bids in the 9th round of the Open Acreage Licensing Policy targeted these areas.
Progress is evident: ONGC drilled 578 wells in FY25—the highest in 35 years—and has committed $7.2 billion in capital expenditure. It has also partnered with BP to enhance recovery from Mumbai High. Private players like Cairn Oil & Gas are stepping up too, planning to triple their output and invest $3–4 billion in E&P over the next five years to eventually contribute half of India’s total oil production.
While the policy direction towards production maximisation is promising, significant progress depends on discovering new reserves. For this, the participation of global oil majors is essential. India’s untapped regions, such as the Andaman basin, are believed to hold immense potential—possibly on par with Guyana—but attracting foreign investment remains a challenge. Legal and financial concerns, particularly around arbitration and compensation, have kept FDI in the sector modest—only $8.2 billion between April 2000 and September 2024.
Moreover, India’s current tax structure—where companies pay up to 65% of revenues in taxes compared to the global average of 35%—and high operational costs further deter investment. A more investor-friendly, facilitative tax regime is crucial to unlocking the $100 billion E&P opportunity and reducing the country’s vulnerability to external oil shocks.
In summary, achieving greater energy self-sufficiency requires an enabling policy environment, increased investment, and active collaboration between public and private stakeholders—both domestic and international.