Shares of Oil and Natural Gas Corporation (ONGC) surged by 6% to reach a high of ₹298 on the Bombay Stock Exchange (BSE) after the Indian government announced a reduction in royalty rates for crude oil and natural gas production. The brokerage CLSA described this decision as a significant positive for both ONGC and the broader upstream oil and gas sector. The government cut the effective royalty rate on onshore crude production from 16.66% to 10%, and for offshore production from 9.09% to 8%. Additionally, the royalty on natural gas was lowered from 10% to 8%. CLSA estimates that these changes could increase ONGC's net crude realization by $2.4-3 per barrel and add approximately ₹2.5-₹3 to its earnings per share. The brokerage also predicts a fair value increase of 7-9% for ONGC's stock. Oil India shares rose 7.5% as well, with CLSA forecasting a fair value increase of ₹42-₹51 per share for the company. This policy shift signals the government's intent to promote upstream exploration rather than impose higher taxes, especially amid rising crude oil prices.