100% FDI is allowed in Tea and Coffee in India under the automatic route. FDI inflows to tea and coffee are expected to make the industry more competitive in the international arena.
A brief Note on Petroleum and Natural Gas Industry in India-
Petroleum and Natural Gas Industry accounts for 35 percent share in the entire energy requirements in India. Downstream industries like petrochemicals, fertilizers and energy plays a vital role in the Oil industry in India.
The total crude oil demand is estimated to be 116 MMT and the production of crude oil in domestic market has accounted for 33.4 MMT. In the past three years, petroleum has witnessed a growth of 7 percent per year. The demand for Natural Gas has been estimated to be 150 MMSCMD in 2004 among which, the domestic market has accounted for only 81 MMSCMD. The Oil and Natural Gas Commission (ONGC) and Oil India Limited (OIL) are both public sector companies and have occupied around 83 percent of the entire domestic production of Petroleum and Natural Gas.
Achievements of Petroleum and Natural Gas Industry-
- Oil and Natural Gas Commission (ONGC) and Oil India Limited (OIL) have occupied 83 percent share of the total oil and gas production in domestic market. Both the companies belong to public sector
- There has been a lot of private sector participation in the Exploration and Production (E&P) sector in both domestic and international market
- The Private sector or JV companies have made 32 vital hydrocarbon inventions in the past four years.
- Reliance Industries Ltd. made the world's largest gas discovery in 2002 of about 5 trillion cubic meters.
- India has a presence of some leading global E&P companies like Hardy Oil & Gas, Niko Resources and Cairn Energy
FDI Inflows to Petroleum and Natural Gas-
- 100 percent FDI is permitted under automatic route in Petroleum and Natural Gas
- The New Exploration Licensing Policy (NELP) has been introduced to enable private sector participation in Oil and Gas exploration which will bring in more investments to the sector
- A Coal Bed Methane (CBM) Policy has been introduced to ensure attractive financial and contract terms in order to explore CBM blocks
Opportunities for FDI in the Petroleum and Natural Gas Industry
Certain important aspects of the Petroleum and Natural Gas Industry that provide opportunities to foreign investors are -
- The growing demand of Petroleum and Natural Gas ensures more investment.
- Strategic Oil & Gas reserves are being promoted by the Government with the help of private sector participation.
- Investment opportunities are being tracked in the discovery of oil fields by investors such as Cairn Energy.
- Large-scale gas field like Reliance, ONGC, and many more are planning to set up units in which indicate a large potential for beneficial investment in exploration.