The Union Cabinet on Wednesday approved deregulation of sale of domestically produced crude oil. The move will ensure marketing freedom for all exploration and production companies.
It will allow local crude producers to sell oil to private companies, which in turn, would help raise revenue of State-run producers such as ONGC and Oil India.
The decision would be effective from October 1, 2022 and existing conditions to sell crude oil to the Government-run companies would be waived, the government said in a statement, adding that exports will not be permitted, according to Reuters.
"Companies will now be free to sell crude oil from their fields in domestic market. Government revenues ... will continue to be calculated on uniform basis across all contracts," the Government said.
India's oil output has been stagnant for years, forcing the country to rely on costly imports. India, the world's third largest oil importer and consumers of oil, buys about 85 per cent of its crude oil needs from overseas.
Government currently allocates crude produced by state-run ONGC and Oil India to various refiners. The two companies charge a flat rate for their crude, irrespective of the grade.