New Delhi, May 12 -- The Centre's decision to cut royalty rates on crude oil and natural gas production is aimed at encouraging upstream exploration and production activity in India and attracting fresh investments into the oil and gas sector, according to a report by global brokerage CLSA.

The report said, "These actions confirm the government's intention to promote policies which boost upstream exploration and production."

The report adds that the decision is expected to provide a significant boost to state-run Oil and Natural Gas Corporation (ONGC) and Oil India.

"In a surprise move, the government cut the royalty charged on the production of crude oil and gas which could add fair value of 7 per cent-9 per cent for ONGC and 9 per ce...