Rationalizing FDI policy for petroleum and gas

The Indian oil and gas sector is one of India’s core industries and has a very significant contribution towards the country’s economy. In the recent past, it has been observed that the consumption of petroleum products in India is at its peak and demand already far exceeds domestic supply. Therefore, the country has to depend largely on imports of oil from abroad.

In an attempt to meet the increasing demand for oil and gas, the Department of Industrial Policy and Promotion in the Ministry of Commerce and Industry has rationalized the foreign direct investment (FDI) policy for the petroleum and natural gas sectors.

The year 2007 witnessed a number of significant initiatives by the government across the entire value chain of the hydrocarbon sector to accelerate the domestic production of oil and gas, putting in place an investor-friendly policy regime for the rapid growth of investment and oil sector infrastructure.

The Petroleum and Natural Gas Regulatory Board (PNGRB) was set up under the PNGRB Act, 2006, which provides for the setup of a board to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas, excluding the production of crude oil and natural gas.

Gautam Khaitan is a partner at OP Khaitan & Co. He works mainly on corporate and commercial matters and has considerable experience over a wide range of corporate and commercial transactions.