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The overseas arm of India's Oil and Natural Gas Corp Ltd (ONGC) should not be merged with its parent company, ONGC's chairman said on Thursday, a week after the government proposed setting up an integrated oil company to better compete with global majors. 

ONGC Videsh should be given more autonomy and merging companies horizontally will create a monopoly, ONGC Chairman Dinesh Sarraf said.

India's finance minister proposed setting up an integrated oil company in his budget speech last week, and said combining existing oil companies will give them capacity to bear higher risks and avail economies of scale. 

New Delhi is struggling to raise local oil production and imports about 80 percent of its oil. Prime Minister Narendra Modi in 2015 set a goal of cutting that to 67 percent by 2020.