Government Initiates Measures to Decrease Coal Import Dependency

The Indian government is taking significant steps to reduce the country’s dependency on coal imports while boosting domestic coal production. With a focus on enhancing supply and ensuring energy security, various initiatives have been implemented, including increasing the Annual Contracted Quantity (ACQ) for coal and revising policies to facilitate long-term coking coal linkages. These measures aim to streamline coal availability for power generation and steel production, ultimately leading to substantial savings in foreign exchange.

Government Initiatives to Reduce Import Dependency

The Indian government has introduced several measures to decrease reliance on coal imports. One of the key initiatives is the increase in the Annual Contracted Quantity (ACQ) for coal, which has been raised to 100% of the normative requirement. This adjustment applies to non-coastal power plants that previously had their ACQ reduced to 90% and coastal power plants with a reduction to 70%. By increasing the ACQ, the government aims to enhance domestic coal supplies, thereby minimizing the need for imports.

Additionally, the amendment to the Non-Regulated Sector (NRS) linkage auction policy in 2020 has extended the tenure of coking coal linkages to up to 30 years. This long-term approach is expected to positively impact the substitution of imported coal. In 2022, the government mandated that coal companies provide full Power Purchase Agreement (PPA) requirements for existing linkage holders, regardless of trigger and ACQ levels, further reducing import dependency.

To monitor coal imports effectively, an Inter-Ministerial Committee (IMC) was established in May 2020. The IMC has developed an Import Data System to track coal imports, ensuring that only essential imports occur. The Foreign Trade Policy governing coal imports has also been revised to require compulsory registration in the Coal Import Monitoring System (CIMS) Portal. These measures are part of a broader strategy to achieve coal import substitution.

Boosting Domestic Coal Production

To enhance domestic coal production, the government has implemented several strategies. Regular reviews by the Ministry of Coal aim to expedite the development of coal blocks. The Mines and Minerals (Development and Regulation) Amendment Act, 2021, allows captive mine owners to sell up to 50% of their annual mineral production in the open market, promoting greater coal availability.

A Single Window Clearance portal has been established to streamline the operationalization of coal mines. Additionally, a Project Management Unit (PMU) has been set up to assist coal block allottees in obtaining necessary approvals and clearances. The auction of commercial mining on a revenue-sharing basis, launched in 2020, has introduced incentives for early production and coal gasification, further encouraging domestic coal output.

The terms for commercial coal mining have been made more favorable, allowing new companies to participate in the bidding process with reduced upfront costs and flexible operational parameters. This liberalization is expected to attract investment and increase coal production capacity.

Coal Companies’ Efforts to Increase Production

Coal companies are actively working to boost domestic coal production through various initiatives. Coal India Limited (CIL) has adopted modern technologies in its underground mines, including Mass Production Technologies and Continuous Miners. In opencast mines, CIL utilizes state-of-the-art machinery and has standardized heavy earth-moving equipment for efficient operations. Digital transformation efforts are also underway in several mega mines to enhance productivity.

Singareni Collieries Company Limited (SCCL) is focusing on expediting permissions and clearances for new projects while developing infrastructure for coal evacuation, such as Coal Handling Plants and Crushers. These efforts are crucial for ensuring that coal production meets the growing demand.

In the fiscal year 2024-25, India imported 243.62 million tonnes of coal, a decrease from 264.53 million tonnes in the previous year. This reduction of approximately 20.91 million tonnes has resulted in foreign exchange savings of around ₹60,681.67 crores. The Ministry of Coal has set an ambitious target of achieving 1.5 billion tonnes of domestic coal production by FY 2029-30, emphasizing the government’s commitment to reducing non-essential coal imports.

Future Plans and Infrastructure Development

The Indian government is focused on developing infrastructure to support increased coal production. In February 2024, the Ministry of Coal launched the Coal Logistic Plan and Policy, aimed at improving coal evacuation efficiency in line with projected production increases. This initiative is part of a comprehensive strategy to ensure that domestic coal production meets future energy demands.

Union Minister of Coal and Mines, Shri G. Kishan Reddy, highlighted these developments in a recent written reply in the Rajya Sabha, underscoring the government’s commitment to enhancing domestic coal supply and reducing import dependency. The ongoing efforts reflect a strategic approach to achieving energy security and economic stability through increased domestic coal production.

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