India will give an income-tax break on natural gas production after withdrawing it last year, seeking to attract overseas investment in the nation’s energy exploration program.
The benefit will be available on earnings from oil and gas production from blocks to be awarded in the 2009 round of auctions, Finance Minister Pranab Mukherjee said in his 2009 budget speech.
India announced its largest planned auction of oil and gas areas in April 2009 and postponed it on concern that the absence of the tax break would keep prospective bidders away. The country received bids for fewer blocks than offered last year after the tax holiday for gas production was withdrawn in the 2008 budget.
Oil and gas companies including BP Plc, Reliance Industries and BHP Billiton Ltd. have committed to spend $10 billion on energy exploration in India, the finance ministry said in a report July 2. Asia’s third-largest energy consumer is seeking to cut oil imports and wants to increase local oil and gas production as output from three decade-old fields declines.
India received bids for 45 of the 57 blocks auctioned last year, of which 44 were offered to companies, including BHP Billiton, the world’s largest mining company, and ONGC.
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