The government on Thursday revamped rules for future exploration and production of oil and gas blocks in its efforts to attract private investment and increase domestic production. India imports four out of every five barrels of crude oil it consumes and is likely to shell out more than $100 billion on oil purchases in 2018-19.
"The emphasis of the new rules is for raising hydrocarbon production," said Dharmendra Pradhan, oil minister.
Under the new rules, producers will be given pricing and marketing freedom that is currently non-existent in natural gas blocks in India. Explorers will also be given financial incentives for early production from their blocks, Mr Pradhan said.
"Fiscal incentive is also provided on additional gas production from domestic fields over and above normal production," a government statement said.
Prime Minister Narendra Modi, who is seeking re-election in a few months, has targeted a 10 per cent reduction to the country's dependence on imported crude by 2022.
However, the country's dependence has increased from 78 per cent in 2014-15 to an estimated 84 per cent in 2018-19, government data shows.
Mr Pradhan said that state-owned companies Oil and Natural Gas Corp and Oil India will be allowed to induct private players to enhance production from its existing blocks and bring in new technology and capital.
The new rules will be largely applicable on 19 basins and on future licensing rounds, he added.
The country has 26 sedimentary basins, of which only seven are producing.
Encouraging private partnership can lead to more discoveries and higher production, local broker Emkay said in a report.