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Panel Recommends Minimum R&D Spending Benchmark

Parliamentary Standing Committee on Petroleum and Natural Gas has recommended that the Ministry of Petroleum and Natural Gas consider setting a minimum R&D expenditure benchmark for all oil public sector undertakings (PSUs), preferably as a percentage of their Profit Before Tax (PBT), amid the need to strengthen indigenous technology and support India's energy transition.

The recommendation comes as major oil and gas PSUs together spent about 2.16 per cent of their combined Profit After Tax (PAT) on research and development (R&D) in 2025-26, with significant variations across individual companies.

The committee noted that major oil PSUs spent Rs 2,796 crore on R&D against a combined PAT of Rs 1,29,164.5 crore in FY 2025-26, translating into 2.16 per cent of their combined PAT. Different PSU's have spent between 3.89 per cent to 0.58% of their PAT in R&D during 2025-26.

The committee observed that R&D spending among oil PSUs remains largely dependent on internal resources, with limited budgetary support from the government. It said, "some of the major Oil PSUs have spent around 2.16 % of their combined 'Profit After Tax' in the Financial Year 2025-26 on R&D."

Push for Uniform Investment Norm

Highlighting the differences in R&D spending among individual PSUs, the panel said a uniform investment norm should be explored to sustain innovation and technological advancement, particularly against the backdrop of India's energy transition objectives and geopolitical uncertainties. "The Committee are of the view that a uniform R&D investment norm across PSUs may be explored for sustained innovation and technological advancement in petroleum sector," the report said.

The committee specifically recommended that the ministry may consider "setting a benchmark of minimum expenditure on R&D for all Oil PSUs, preferably a minimum percentage of their 'Profit Before Tax'", with the benchmark subject to periodic review and adjustment based on sectoral priorities and performance.

The recommendation marks a move towards institutionalising a more structured R&D funding framework for oil PSUs rather than leaving expenditure entirely to individual companies' requirements and priorities.

Ministry to Explore Possibility

The Ministry had told the committee that there was no government guideline mandating a minimum percentage of PBT for R&D spending. However, it said it would explore the possibility of establishing such a norm. "There is no separate guideline from Government mandating spending a minimum percentage of their PBT on R&D activities," the ministry said, adding that it "would explore the setting up of a norm for earmarked/ mandated minimum expenditure on R&D activities."

Further Recommendations and Context

Besides a minimum spending benchmark, the committee recommended exploring a dedicated fund to co-finance high-impact, cross-sectoral R&D projects in areas such as green hydrogen, carbon capture, biofuels and waste-to-energy technologies, with participation from PSUs and premier research institutions. It also called for measures to encourage private co-investment in the R&D sector.

The report noted that R&D expenditure by oil PSUs has generally increased over the years. Total spending by the listed oil PSUs stood at Rs 2,083.64 crore in FY 2021-22, rising to Rs 3,057.81 crore in FY 2024-25 before standing at Rs 2,908.95 crore in FY 2025-26.

The committee said strengthening R&D is particularly important for developing indigenous technologies, improving efficiency and advancing clean-energy solutions as India pursues its energy transition goals. (ANI)