Government Outlines Guidelines for ₹84,084-Crore Samudra Manthan Deepwater Exploration Scheme

The Indian government has issued operational guidelines for the ₹84,084-crore Samudra Manthan scheme, detailing a framework to fund up to half the cost of risky deepwater exploration wells. Under the central bargain of the program, the state will absorb losses if a well finds nothing, but expects to be repaid out of revenue if oil or gas is discovered.

According to the guidelines, recovery will begin after seven years of commercial production or once the operator recoups 50 percent of its exploration and development costs, whichever comes first. Repayment will occur in annual instalments without inflation indexation.

The initiative is designed to support 60 wells across deepwater areas exceeding 400 metres and ultra-deepwater areas exceeding 1,500 metres. Among these, 56 exploratory wells will receive up to 50 percent of actual costs, capped at ₹675 crore per well. Four stratigraphic wells, meant to study rock layers, will receive up to 100 percent funding capped at ₹1,350 crore each. Only state-run firms or consortia led by them are eligible to apply, with payments distributed on a milestone basis.

Eligibility is restricted to blocks awarded under the Revenue Sharing Contract regime from bid rounds held since 2016. Production-sharing and coal-bed methane blocks awarded prior to that are excluded unless notified otherwise. Only exploration wells aimed at finding new resources qualify for the grants, while development and sidetrack wells are excluded.

First announced by Prime Minister Narendra Modi during his August 15, 2025 Independence Day speech, the scheme aims to reduce India's reliance on imported hydrocarbons. Petroleum Secretary Neeraj Mittal described the initiative in the preface to the guidelines as a major upstream oil and gas intervention that could add over 600 million tonnes of oil equivalent to India's reserves. The program will run through FY2030-31, featuring FY2026-27 as a preparatory phase.

Beyond individual wells, a second track of the scheme provides viability gap funding for shared infrastructure, such as subsea manifolds, trunk pipelines, central processing platforms, and shared floating production units. This infrastructure is intended to connect small or stranded discoveries, initially focusing on the Mahanadi basin alongside token funding for Kutch.

A third track of the scheme will finance oil and gas manufacturing and services zones featuring utilities, jetties, warehouses, and testing laboratories to support growing deepwater activity. Developers must secure land and clearances, with locations to be shortlisted by the Infrastructure Appraisal Board. Additionally, the Directorate General of Hydrocarbons will run a seismic data program, fully funding two-dimensional surveys while utilizing a multi-client model for three-dimensional surveys.

"The Samudra Manthan scheme is a structured initiative by the government to de-risk upstream capital investments in India's energy sector. By absorbing early-stage geological risks while retaining a revenue-recovery mechanism upon commercial success, the policy balances state support with fiscal accountability. For state-run enterprises undertaking complex deepwater and ultra-shared infrastructure projects, this financial backing provides vital capital relief, though rigorous milestone tracking and eligibility norms will be critical to execution." — Dr. Shishir Gupta, Founder & CEO, StartupLanes