Securing India’s Energy Future: The Role of Domestic Upstream Oil & Gas in Reducing Import Dependence

India’s energy security challenge is, at its root, an arithmetic one. The country’s crude oil import dependence crossed 90 per cent in FY26, per Petroleum Planning and Analysis Cell data, with the full-year crude import bill at roughly US$121.8 billion. Domestic crude production has moved the wrong way over the past decade — from a peak of about 35.9 MMT in FY12 to around 26 MMT in FY26 — even as consumption of petroleum products has nearly trebled since the turn of the century, from about 90.6 MMT to 243.2 MMT. The macroeconomic consequences are well documented: RBI’s October 2025 Monetary Policy Report estimated that a sustained 10 per cent rise in crude prices could add roughly 30 basis points to inflation and shave about 15 basis points off GDP growth. This is no longer a sectoral concern — it is a macroeconomic one and it places domestic upstream oil and gas squarely at the centre of India’s growth and stability calculus.

The encouraging part is that the policy architecture to reverse this trend is largely in place. A decade of reform — the Hydrocarbon Exploration and Licensing Policy (HELP), Open Acreage Licensing Policy (OALP), Discovered Small Field and Enhanced Recovery policies and natural gas marketing reforms — has been followed by two steps of real consequence. First, the release of nearly 1 million sq. km of erstwhile “No-Go” areas across the East Coast, West Coast and Andaman basin, with special fiscal incentives & no revenue-sharing, flexible work programmes, relaxed timelines for the geologically riskier Category II and III basins that hold the bulk of India’s yet-to-find resources. Second, the Oilfields (Regulation and Development) Amendment Act, 2025, which came into force in April 2025, alongside the Hon’ble Prime Minister’s Independence Day announcement of the National Deep Water Exploration Mission – India’s own “Samudra Manthan” for energy self-reliance. Together, these signal that deepwater and frontier exploration are now a national mission rather than a discretionary pursuit. Government-funded seismic acquisition under the National Seismic Programme and open data access through the National Data Repository, are steadily de-risking basins that domestic and international players alike have historically avoided.

What this policy shift needs now is evidence that domestic risk capital, deployed patiently, actually finds hydrocarbons and the recent record suggests it does. Oil India Limited’s exploration acreage has grown roughly twelve-fold since 2017-18, to nearly 1,08,000 sq. km, extending from the mature Assam Shelf into frontier offshore Andaman & Nicobar and Kerala-Konkan basins. In the Andaman offshore, the second of two exploratory wells confirmed the occurrence of natural gas, moving the basin from conceptual frontier to one with demonstrated hydrocarbon potential — now being taken forward through a Technical Service Agreement with TotalEnergies, a 600 sq. km 3D seismic survey and a planned appraisal well. Alongside this, Mission 4+ targets 4.0+ MMT of crude and 5 BCM of gas annually, supported by AI/ML-driven production tools. None of this by itself closes a 90 per cent import gap; what it demonstrates is that frontier acreage opened by policy, backed by sustained capital and global technical partnerships, converts into barrels — the model the wider public and private sector now needs to replicate at scale. Three things would meaningfully accelerate that replication. One, execution speed: of the nearly 1 million sq. km of released No-Go acreage, only about 57,000 sq. km has been awarded so far; a further 98,000 sq. km is under the ongoing OALP-X round, with over 845,000 sq. km still to be offered in future rounds. The pace of award and, more importantly, of actual drilling, once blocks are awarded will determine how quickly reform translates into production. Two, single-window clearance: with land use and environmental permits sitting with states while hydrocarbons remain a central subject, a unified clearance mechanism across the central-state interface would meaningfully compress project timelines. Three, deeper foreign and private capital participation, particularly in deepwater and ultra-deepwater, plays an important role where technology and capital intensity exceed what any single domestic player can absorb alone.

Reducing import dependence is not a hedge against the energy transition — natural gas remains the logical bridge fuel and India’s parallel investments in renewables and critical minerals are proceeding alongside, not instead of, upstream growth. But no transition insulates an economy from a 90 per cent-import-dependent liquid fuels base in the near term. For India, converting frontier basins into producing fields within this decade, not the next, remains the most direct lever available for energy security, macroeconomic stability and strategic autonomy together.

Note: This article is written by Dr Ranjit Rath, Chairman, CII National Committee on Hydrocarbons and Chairman & Managing Director, Oil India Limited (OIL). It was first published in CII ARTHA, Issue 11, July 2026.