Shares of Oil India rose 7% on Tuesday after the Centre revised crude oil royalty rates, reducing the cost burden on domestic upstream producers and improving per-barrel realisations.
The stock climbed to Rs 488.80 on the BSE, taking the company's market capitalisation to Rs 78,613.95 crore.
The Ministry of Petroleum and Natural Gas notified the revised royalty rates and methodologies on May 8 as part of broader reforms aimed at making India's upstream oil and gas sector more stable and attractive for investment.
The move is expected to improve earnings for upstream producers because royalty payments are deducted directly from gross revenue. A lower royalty rate allows producers to retain a larger share of revenue from every barrel sold.
The government described the rationalisation of royalty rates across crude oil, natural gas and casing head condensate as a major reform for the upstream sector. The revision follows the 2025 amendments to the Oilfields (Regulation and Development) Act and the Petroleum and Natural Gas Rules.
In a big boost for the country's Upstream Sector, rationalization of royalty under the ORD Act marks a new era for our Oil & Gas regimes by eliminating inconsistencies and driving growth in the upstream sector under the leadership of PM Sh @narendramodi Ji.
— Hardeep Singh Puri (@HardeepSPuri) May 11, 2026
This landmark… pic.twitter.com/xb60UNyalH
Petroleum Minister Hardeep Singh Puri said in a post on X that the revision marked "a new era" for India's oil and gas regime by removing inconsistencies and creating a more predictable regulatory framework under Prime Minister Narendra Modi.
Puri said the revised schedule was designed to remove anomalies that had persisted across royalty regimes and create conditions for long-term growth in the upstream sector.
"This landmark reform marks a new era for our Oil & Gas regimes by eliminating inconsistencies and driving growth in the upstream sector," Puri said in the post.
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Impact On Producers
The royalty revision is expected to improve valuations for state-run upstream companies.
According to a CNBC-TV18 report citing CLSA, the decision could increase the fair value of Oil and Natural Gas Corporation by 7%-9% and that of Oil India by 9%-11%.
The report said the move would also ease the tax burden on upstream producers at a time when global energy markets remain under pressure because of supply concerns linked to the West Asia crisis.
The revision comes as India seeks to raise domestic hydrocarbon production and reduce dependence on imported crude oil. India imports nearly 85% of its crude oil requirements.
The push to strengthen domestic output has gained urgency amid the Iran war and disruptions in the Strait of Hormuz, which have pushed Brent crude prices above $100 per barrel.
ALSO READ: ONGC Shares Surge 5% After Govt Cuts Crude Oil Royalty Rates
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