The Government of India will provide financial assistance of up to 50% of the cost of eligible deepwater and ultra-deepwater oil and gas exploration wells under its ₹84,084-crore Samudra Manthan scheme, with provisions to recover the support from projects that achieve commercial success.
Under the operational guidelines, the government will absorb the financial risk associated with unsuccessful exploration wells. However, if a well discovers commercially viable oil or gas resources, the operator must repay the government’s contribution from project revenues, subject to specified recovery conditions.
Recovery will begin after seven years of commercial production or when the operator has recovered 50% of its exploration and development costs, whichever occurs earlier. Repayment will be made in annual instalments without inflation indexation.
The scheme will support 60 wells in deepwater areas, defined as depths exceeding 400 metres, and ultra-deepwater areas, where depths exceed 1,500 metres. Of these, 56 exploratory wells will be eligible for assistance covering up to 50% of actual costs, capped at ₹675 crore per well. Four stratigraphic wells, drilled primarily to study underground rock formations, will qualify for support covering up to 100% of costs, capped at ₹1,350 crore per well.
Only state-owned companies or consortia led by them will be eligible to apply. Financial assistance will be released in two instalments: 40% when drilling reaches 40% of the approved depth and the remaining 60% after completion and approval of the well report.
Based on the prescribed limits, financial support for the wells could reach ₹43,200 crore, approximately half of the scheme’s total outlay. The guidelines, however, do not specify a component-wise allocation of the overall budget.
Strict Eligibility Conditions
The scheme will cover only blocks or areas awarded under the Revenue Sharing Contract (RSC) regime through bidding rounds conducted since 2016. Production-sharing contract blocks and coal-bed methane blocks awarded before that period are excluded unless the government notifies otherwise.
Only exploratory wells and wells intended to discover new resources will qualify. Development wells drilled to bring already discovered resources into production, as well as sidetrack well costs, will not be covered.
Operators will remain responsible for expenditure exceeding the prescribed support limits. They may also lose eligibility if they fail to meet their committed work programmes or opt to pay penalties instead of completing the required drilling activities.
The scheme will run through FY2030-31, with FY2026-27 designated as a preparatory year. The first implementation phase will cover FY2027-28 to FY2030-31.
Prime Minister Narendra Modi announced the initiative in his Independence Day address on August 15, 2025, stating that India would work in mission mode to discover oil and gas reserves beneath the sea.
Petroleum Secretary Neeraj Mittal described the programme in the guidelines’ preface as the most ambitious upstream oil and gas intervention undertaken in recent times. He said it could add more than 600 million tonnes of oil equivalent to India’s reserves.
Shared Infrastructure to Unlock Stranded Discoveries
A second component will provide viability gap funding (VGF) for common infrastructure that can connect multiple small or stranded offshore discoveries to an integrated production system.
The proposed infrastructure includes subsea manifolds, trunk pipelines, central processing platforms and shared floating production units. The initial focus will be on the Mahanadi basin, with token funding also envisaged for Kutch discoveries.
The guidelines note that discoveries in basins such as Mahanadi and Kutch may remain stranded or commercially unviable when developed individually, as the cost of pipelines and processing facilities can be prohibitive for smaller fields.
Participating operators will establish a joint venture or special-purpose vehicle to develop and own the shared infrastructure. Before construction begins, the participants must agree on equity participation, ownership arrangements and capacity commitments.
The infrastructure must provide fair and non-discriminatory access under the Petroleum and Natural Gas Rules, with unused capacity made available to other users.
Funding will be released in four equal tranches of 25% linked to project milestones, including physical progress of 25%, 50% and 75%, followed by commissioning. The first tranche will require financial closure, executed construction contracts and signed operator commitment agreements.
The assistance will not dilute operators’ safety, environmental or decommissioning obligations. Funding will also not automatically increase to cover cost escalation or delays. The executive committee may suspend payments and recover amounts already released if milestones are repeatedly missed or funds are misused.
Proposals will be scrutinised by the Public Investment Board before the competent minister sanctions expenditure.
Oil and Gas Manufacturing Zones Planned
A third component will support the development of one or more manufacturing and services zones dedicated to the oil and gas industry.
The proposed zones will provide utilities, berthing and load-out jetties, warehouses, and testing and certification laboratories. The objective is to position India as a global manufacturing and fabrication base as offshore exploration and production activity expands.
Developers, including companies, consortia and joint ventures, will be responsible for securing land and statutory clearances and attracting tenants. State governments have been invited to facilitate land availability, approvals and utilities.
The Infrastructure Appraisal Board is expected to shortlist potential locations within 60 days of its first meeting.
The scheme may be combined with BHAVYA, a separate industrial infrastructure initiative administered by the Commerce Ministry’s trade promotion department. However, any funding shortfall under BHAVYA will not automatically create an additional financial liability for Samudra Manthan.
Assistance for the manufacturing zones will be released on a reimbursement basis in three tranches of 25%, 25% and 50%. Assets created using scheme funds cannot be sold or mortgaged without prior approval. Developers must also report occupancy, investment and employment figures annually for five years after commissioning.
Seismic Surveys to Strengthen Exploration
The Directorate General of Hydrocarbons (DGH) will oversee a seismic data programme to improve the geological information available for offshore exploration.
Two-dimensional seismic surveys will be fully funded by the government, with contractors receiving no resale rights over the data.
Three-dimensional seismic surveys will follow a multi-client model in which contractors co-invest in the surveys, retain licensing revenues and bear the commercial risk associated with selling the data.
Through financial assistance for exploration, shared offshore infrastructure, specialised manufacturing facilities and seismic data acquisition, the Samudra Manthan scheme seeks to encourage investment in India’s deepwater and ultra-deepwater resources while reducing the country’s dependence on imported hydrocarbons.