In an important decision, the government on Wednesday allowed public sector oil companies to take advantage of short term opportunities in the global oil market.
The decision was taken by the cabinent meeting chaired by Prime Minister Narendra Modi.
A official statement said the move would provide a more efficient, flexible and dynamic policy for crude procurement, eventually benefiting consumers.
State-owned firms like Indian Oil Corporation have traditionally been allowed to source crude only from national companies of oil producing countries.
Indian companies were also required to follow a long tendering process that curtailed their ability to procure cheap crude in case of a distress sale in international market.
It was long felt that the list of companies from where the PSUs can buy crude oil on term contracts needs to be expanded to include global oil giants.