Amid the ongoing West Asia crisis and concerns over the domestic fuel situation, the government has revised royalty rates for crude oil and natural gas production with the aim of boosting domestic hydrocarbon output and reducing dependence on imported crude oil and natural gas.India imports nearly 85 per cent of its crude oil and about 50 per cent of its natural gas requirements, putting pressure on the economy and foreign exchange reserves.The new royalty framework seeks to promote hydrocarbon exploration, especially in deep-water and ultra-deep-water blocks. “This is a significant fiscal reform aimed at encouraging exploration in technically difficult offshore regions. A concessional royalty regime, especially for deep-water and ultra-deep-water blocks, could improve investor interest and accelerate commercial production in frontier exploration areas at a time when India is seeking to reduce dependence on imported crude oil and natural gas,” official sources said.The revised royalty structures for crude oil, casing head condensate and natural gas production under the Oilfields (Regulation and Development) Act, 1948, have been formalised by the Ministry of Petroleum and Natural Gas.The new rules introduce concessional royalty rates for different categories of oil and gas fields under various exploration and production regimes, including the Hydrocarbon Exploration and Licensing Policy (HELP), New Exploration Licensing Policy (NELP), Discovered Small Field Policy and Coal Bed Methane Policy.Onshore crude oil and casing head condensate production from areas awarded on a nomination basis to national oil companies, blocks awarded to private or joint venture contractors prior to NELP, and areas awarded under NELP will continue to attract a royalty rate of 12.5 per cent. Shallow-water offshore blocks under these regimes will attract a 10 per cent royalty.For deep-water offshore production in these categories, royalty has been fixed at 5 per cent for the first seven years from the commencement of commercial production. From the eighth year onwards, the royalty rate will increase to 10 per cent.In the case of areas awarded under the Discovered Small Field Policy and HELP, the royalty rate for onshore blocks has been fixed at 12.5 per cent and 7.5 per cent for shallow-water blocks. For deep-water blocks under these policies, no royalty will be charged for the first seven years from the commencement of commercial production. From the eighth year onwards, royalty will be levied at 5 per cent. For ultra-deep-water blocks, royalty will remain zero for the first seven years and thereafter rise to 2 per cent. The notification also revises royalty rates for natural gas production.It further introduces concessional royalty rates for commercial production from contracts awarded under HELP based on bids invited on or after April 11, 2019.