Page 33 - Policy & Economic Report - July 2025

July 2026 POLICY AND ECONOMIC
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The anticipated inflows are expected to strengthen India's balance of payments, augment foreign
exchange reserves and improve liquidity in the domestic foreign exchange market. A stronger reserve
position would provide the Reserve Bank of India with greater flexibility to manage exchange rate volatility
and cushion the economy against external shocks arising from volatile capital flows, elevated crude oil
prices and geopolitical risks. In addition, sustained foreign currency inflows are expected to reinforce
investor confidence, improve India's external financing position and support macroeconomic stability
during a period of heightened global uncertainty.

The FCNR(B) initiative also highlights the increasing role of policy flexibility in external sector
management. By leveraging the Indian diaspora and providing targeted incentives to financial institutions,
the RBI has created an effective mechanism to augment foreign currency resources without imposing
restrictions on capital flows. If the projected inflows materialize, the initiative could become one of the
largest foreign currency mobilization programmes undertaken by the RBI, further strengthening India's
resilience against external vulnerabilities and supporting sustainable economic growth over the medium
term.

7. India opens a new frontier in offshore hydrocarbon exploration with ONGC's First Deepwater Well

India's quest for greater energy security entered a new phase with the commencement of ONGC's first
deepwater exploratory well in the Mahanadi Offshore Basin off the Odisha coast. The drilling of the MN-
DW18-1-H-D well under the Government's Samudra Manthan Campaign marks a significant milestone in
India's efforts to unlock its deepwater and ultra-deepwater hydrocarbon resources, which remain among
the least explored yet most promising energy frontiers in the country. The initiative reflects the
Government's broader strategy to enhance domestic oil and gas production, reduce dependence on
imported hydrocarbons and strengthen long-term energy security.

The exploratory well is located approximately 23 nautical miles from ONGC's Konark discovery and builds
upon the company's recent Utkal and Konark discoveries, which have significantly improved the
hydrocarbon prospectivity of the Mahanadi Offshore Basin. The current drilling programme is the first in
a series of planned deepwater wells aimed at evaluating the basin's commercial potential and generating
critical geological data for future exploration and production activities.

Deepwater exploration has emerged as a strategic priority for India as the country seeks to arrest the
long-term decline in domestic crude oil production while meeting rapidly growing energy demand.
According to ONGC, India's eastern and western offshore basins, extending to water depths of up to 3,000
metres, are estimated to contain more than 5,600 million tonnes of oil equivalent (MTOE) of hydrocarbon
resources. Successful exploration of these reserves could substantially augment domestic oil and natural
gas production, reduce import dependence and diversify India's energy supply over the coming decades.

The commencement of drilling also reflects the impact of a series of policy reforms undertaken by the
Government to revitalise India's exploration and production (E&P) sector. The introduction of
the Hydrocarbon Exploration and Licensing Policy (HELP), expansion of the Open Acreage Licensing Policy
(OALP), adoption of a transparent revenue-sharing regime and the opening of nearly one million square

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