The natural gas sector in India is anticipating significant policy reforms and relief measures in the upcoming interim budget to promote the consumption of natural gas. Stakeholders are urging the government to mandate the use of natural gas in areas where infrastructure is in place, aiding the nation's goal of increasing the gas share in its energy mix from 6% to 15% by 2030. Additionally, the industry is hopeful that natural gas will be categorized under the infrastructure sector, unlocking improved financing and credit opportunities.

Hardip Singh Rai, CEO of THINK Gas, expressed the industry's expectation for the government to consider including natural gas under the Goods and Services Tax (GST). This move would require approval from the GST Council, comprising both the Centre and states. The government has been actively promoting a gas-based economy, with a focus on increasing the share of gas in the energy mix. Stakeholders anticipate continued efforts, particularly in expanding domestic piped natural gas (PNG) connections.

There is optimism within the industry for potential incentives for city gas distribution players to enhance project viability and execution. Sandeep Trehan, President of Marketing & Business Development at THINK Gas, suggests that the central government may collaborate with state governments to implement policy initiatives, such as reducing Value Added Tax (VAT).

Meanwhile, the oil sector is urging the government to bring petroleum products under the ambit of GST and eliminate the special additional excise duty (SAED) on crude oil. Girishkumar Kadam, Senior Vice President & Group Head of Corporate Ratings at ICRA, highlighted the impact of SAED on the profitability of upstream companies and refiners. Considering the softened crude prices and reduced gross refining margins, the industry is seeking the discontinuation of SAED.

Further recommendations include exempting liquefied natural gas (LNG) imports from customs duty, similar to crude oil, which currently attracts a 2.5% customs duty. The government introduced SAED on crude oil and certain refinery products in July 2022, with subsequent revisions.

The interim budget for 2024 may also address energy transition practices by public sector oil and gas companies, aligning with the nation's goal of achieving net-zero emissions by 2070. Budget 2023 had allocated Rs 30,000 crore for capital investments in state-owned oil marketing companies to facilitate the energy transition, a fund yet to be released to these companies