In recent years, the economic policy approach has centred on deregulation and tax optimisation. The ORDA Bill marked a significant step in deregulating the upstream oil and gas sector by improving flexibility and reducing regulatory constraints. However, this progress was partially offset by the recent GST rationalisation, which raised GST on oilfield equipment and services from 12-18 per cent, increasing costs for an already capital-intensive industry.

There remains a strong case for reducing GST on oilfield services to five per cent and for bringing petroleum products under the GST framework, beginning with natural gas and aviation turbine fuel. Such a move would help correct structural tax inefficiencies, support gas-based industries and improve viability for segments such as coal bed methane and compressed biogas.

Granting infrastructure status to the petroleum sector would ease financing challenges by improving access to long term capital. Additionally, the government could consider setting up a dedicated petroleum financing fund, similar to those in allied sectors, by utilising resources from the oil cess development fund to support exploration of new oil and gas fields through public and private participation.

As Budget 2026 approaches, the industry is looking for targeted measures that strengthen domestic exploration and improve investment conditions across oil, gas and allied energy segments.

Dr. Kapil Garg, Founder & Managing Director, Oilmax Energy