India’s coal sector edging towards self-reliance

With the fifth-largest coal reserves globally and ranking as the second-largest consumer, coal remains a critical energy source in India. Approximately 74 per cent of India’s power generation depends on Thermal Power Plants (TPPs), predominantly fuelled by coal, underscoring the necessity for a robust and sustainable coal industry. While domestic production has shown good traction in recent years, there is a need to further improve output to reduce reliance on imports

India’s coal demand has witnessed a significant surge over the past three years, growing more than 20 per cent, from 1,027.22 million tonnes (mt) in 2021-22 to 1,237.54 mt in 2023-24, per the latest data by the Ministry of Coal and Mines. The current fiscal year, 2024-25, has already recorded 786.64 mt of coal demand till November 2024, accounting for 63.5 per cent of the previous year’s total. The consistent rise in coal demand has been matched by a steady increase in domestic supply but still, the dependency on imports remain a cause for concern...The contribution of domestic coal to the overall supply mix has been increasing steadily. In 2021-22, domestic production accounted for 79.7 per cent of total coal supply, while imports made up 20.3 per cent. This ratio remained fairly stable over the next two years, with domestic coal comprising 78.7 per cent and 78.6 per cent of the total supply in 2022-23 and 2023-24, respectively. However, in 2024-25 (up to November), the share of domestic coal has risen to 83.6 per cent, while imports have declined to 16.4 per cent.

Despite the steady growth in domestic supply, the increase in coal demand raises concerns about the environmental impact, especially as India pushes towards its renewable energy targets. Notwithstanding the promotion of renewable energy, the rapid growth in electricity demand ensures thermal power will remain a crucial component of India’s energy mix, with its share projected to be 55 per cent by 2030 and 27 per cent by 2047. Comprehensive studies estimate that coal demand will rise to approximately 1,462 mt by 2030 and further increase to 1,755 mt by 2047. Balancing the need for coal with commitments to sustainability remains a significant challenge. The data shows that the share of coal-based electricity generation is more than 80 per cent in the last three years...An Inter-Ministerial Committee (IMC) has been constituted in the Ministry of Coal in 2020 for coal import substitution. On the directions of the IMC, an Import Data System has been developed by the Ministry of Coal to enable the Ministry to track coal imports. Efforts are taken to ensure more domestic supplies of coal.

To ramp up domestic coal production to achieve self-reliance and reduce coal import, the government has taken initiatives including Single Window Clearance, amendment of Mines and Minerals (Development and Regulation) Act, 1957, to allow captive mines to sell up to 50 per cent of their annual production after meeting the requirement of the end-use plants, production through MDO mode, increasing use of mass production technologies, new projects and expansion of existing projects and auction of coal blocks to private companies/PSUs for commercial mining. Also, 100 per cent Foreign Direct Investment (FDI) has also been allowed for commercial mining.