The Union Cabinet on Wednesday in a significant move approved the deregulation of the sale of domestically produced crude oil in a bid to boost government's revenues, said Union Minister Anurag Thakur, the PTI reported.


The move is aimed at ensuring marketing freedom for all Exploration and Production (E&P) companies as they will now be free to sell oil from their fields in domestic market. However, the companies will not be able to export the domestically produced oil to other countries.


From October 1, condition in Production Sharing Contracts (PSC) to sell crude oil to the government or its nominee or government companies will be waived.


Thakur said, "The Cabinet has approved deregulation of the sale of domestically produced crude oil. It'll be implemented from October 2022. Now, companies can sell their crude oil to any private company in the domestic market along with government companies."


The minister said, "It will cut down imports in the longer run," while adding, "There will be no revenue loss."


This essentially means producers will be free to sell oil from their fields in the domestic market.


India imports 85 per cent of its crude oil needs. Elevated crude oil prices have an inflationary impact on the economy and hurt its macroeconomic indicators.


Meanwhile, Anil Agarwal, the chairman of Vedanta Limited congratulated PM Narendra Modi and his cabinet taking a landmark decision of giving marketing freedom to domestic crude oil producers.


"India has vast reserves of hydrocarbons and can produce oil and gas at the lowest cost. Rationalization of taxes & levies and longer lease of mines, in line with global standards, along with self-certification will help boost India's domestic production," Agarwal said.


"This decision will attract many national and international companies to do exploration and production in India your we are committed to make $4Bn investment and contribute to 50% of India’s domestic hydrocarbon output," he added.


According to the report, India’s domestic crude oil output has been declining consistently since FY14-15. A decline in domestic production even as demand soars has led to steady rise in imports.


In FY21-22, India’s crude oil production was 29.69 million tonnes, 2.63 per cent lower than the 30.5 million tonnes output a year back ago. It was 11.67 per cent below the target of 33.61 million tonnes for the year.


In another development, the Cabinet approved Rs 2,516 crore for computerisation of 63,000 Primary Agricultural Credit Societies, Thakur added.