Jaipur, Rajasthan | February 2nd, 2026

As the Union Budget 2026-27 is here, industry players in the energy industry of India have urged the government to present focused fiscal and regulatory changes that would increase domestic production, speed up the rollout of smart meters, and increase natural gas utilization. The leaders of the industry think that rationalisation of tax and enabling policies would make a big difference in allowing efficiency in operations, lowering costs, and helping India transition to energy in the long term.

India still depends a lot on imports, with more than 80 percent of its crude oil needs being imported from international markets. With national energy demand projected to gain momentum in the next few years, the industry participants have seen Budget 2026 as a pivotal chance to overcome the long-term structure-related issues and promote investment in upstream, midstream, and downstream sectors.

One of the requirements by the industry stakeholders is that crude oil and natural gas be included in the Goods and Services Tax (GST) under the preferred rates. These fuels will not be subject to GST and are likely to facilitate input tax credit availability, eliminate cascading taxes, ease compliance and help in making business much easier across the entire energy value chain.

Another issue that has been raised is the recent increase in GST on oilfield equipment and services by 12 percent to 18 percent. The industry professionals hypothesize that it has greatly increased the project cost, especially exploration and production projects that take a long gestation period to recoup capital.

Oil marketing companies will also be keen to obtain timely compensation charged on the under-recoveries suffered in the sale of domestic liquefied petroleum gas (LPG). Although the government aid is usually given at intervals, under-recoveries are also very high and thus constant compensation is needed to keep the financial situation intact and also to secure cheap cooking fuel for the households.

In addition to traditional energy reforms, the increased pace in the use of smart meters has become one of the key areas of focus before the Budget 2026. Smart metering is becoming an important tool in enhancing efficiency, transparency, and demand-side control in the power industry. It allows distribution companies to minimize losses, improve the quality of billing and empower consumers with real-time consumption data and reduce the manual input.

Players in the industry are of the opinion that favourable taxation and specific incentives would accelerate the implementation of smart meters, especially in urban and semi-urban areas. The growth of digital metering solutions is also very consistent with the greater governance and digital infrastructure campaigns to improve accountability and operational efficiency within the power sector.

Simultaneously, stakeholders are requesting tougher policy backing that would encourage the use of natural gas in a better and cleaner way. One of the key proposals is the status of infrastructure to those natural gas projects, and it will enhance the availability of long-term financing and reduce the cost of borrowing to pipelines, LNG terminals, and the city gas distribution networks. These steps are felt as necessary in the augmentation of the proportion of gas in the Indian power structure.

Other tax incentives requested include special treatment on pipeline materials, compressed natural gas (CNG) and biogas, as well as the abolition of the current customs levies on liquefied natural gas imports. Experts in the industry claim that the reduction in the prices of inputs would turn gas competitive and would further set out its usage in more of the industrial, commercial, and household markets.

Upstream operators have demanded a reduction of cess on crude oil, introduction of a tax holiday to new exploration blocks, and maintenance of exploration activities out of the GST regime. As the industry now operates under a number of contractual schemes with different royalty and cess schemes, the business professionals feel that harmonisation would ease the compliance process and also make the investment environment more equal.

Another initiative that has been suggested by the sector is the establishment of its own petroleum financing fund that will be able to finance the renewable energy and other capital-intensive industries. This type of fund may employ the current cess collections to fund domestic exploration, technology enhancement, and production efforts using a mixture of public and private funds.

The stakeholders have stressed that consumers need to be persuaded to abandon their LPG cylinders and switch to piped natural gas connections to facilitate a cleaner household energy solution. Commenting on the issue, Yashraj Khaitan, Founder and CEO of Polaris Smart Metering, said, “We recommend that the same incentives given today to customers for LPG cylinders should be extended to customers adopting piped gas connections from CGD companies. This will help the government eliminate long term expenditure on LPG cylinders and transition customers to a hassle-free and more cost-effective solution.”

According to analysts, a congruence between fiscal incentives and technological adoption as part of a strategy to curb subsidy payments, including smart meters and piped gas, may contribute to the reduction of the burden of subsidies, enhanced efficiency, quality of service and transparency. With energy security, affordability, and sustainability becoming central issues, Budget 2026 is increasingly considered as the prospective pivot point in the changes to the policies designed to tighten the local production and modernise energy infrastructure.

Stakeholders of the industry are of the opinion that a balanced strategy involving rationalisation of taxes, investment in infrastructure, and technological reforms can help enhance the energy ecosystem in India.

Originally posted on - https://www.epressrelease.org/energy-sector-seeks-tax-reforms-to-drive-domestic-output-smart-meter-rollout-and-gas-adoption/