India's home ministry has given a go-ahead to Cairn Energy's plans to sell its majority stake in its India unit to Vedanta Resources. The approvals would allow the closure of the multibillion-dollar deal between the mining giants. The deal has reportedly also received a no-objection certificate from Oil & Natural Gas Corp (ONGC), which is the joint venture partner of Cairn India Ltd.

Cairn Energy was waiting for approval from ONGC and the Ministry of Home Affairs to sell its 30 per cent stake in the India unit to London-listed, India-focused Vedanta. Vedanta has already acquired 28.75% stake in Cairn India through an open offer and from Cairn Energy.

The approval was delayed mainly as ONGC wanted Cairn India to make a portion of royalty payouts to the government. Cairn India has a 70% stake in India's largest onshore oil fields in Rajasthan and the ONGC holds the remaining stake. ONGC bears the entire burden of royalty.

ONGC says that royalty payouts should be shared before the company agrees to a sale. Meanwhile, Cairn Energy and Vedanta have decided to recover royalties from the sale of crude oil. Vedanta will have a strong presence in India after the acquisition while Cairn will be able to focus on its operations in Greenland.