The companies had to pay 100 percent royalty and cess tax from the blocks under the earlier production sharing contract, making it a big disincentive to invest in production growth of the blocks, Pradhan said

 

Pradhan said that the cabinet also extended the time period given to oil and gas companies to develop hydrocarbon blocks in the northeastern part of India. Production from these blocks will be linked to market prices of natural gas, the minister said

Pradhan said the government also decided to give tax exemption on capital spending on oil and gas blocks given before 1999 when India’s first bidding round was kicked off

 

It increased the number of days to announce force majeure due to a crisis on an oil and gas block located in a challenging region from seven days to 14 days, the minister said

 

He added these incentives will help the two state-owned companies invest in increasing production of oil and gas.