Strategies for Coal Sector Sustainability and Competitiveness

Strategies for Coal Sector Sustainability and Competitiveness

India has the world’s 5th largest coal reserves to contribute to the country’s energy security and it accounts for 55% of the country’s energy needs. India’s energy mix is diverse, but dominated by coal, which fuels a significant portion of the country’s electricity generation. While renewable energy sources like solar and wind are growing rapidly, they still constitute a smaller share of the overall energy mix compared to coal. The country is actively working to diversify its energy sources and increase its reliance on renewables to meet rising energy demands and address climate change concerns.

Considering the global shift towards cleaner energy sources and the need to reduce carbon emissions, Government has undertaken the following strategic initiatives to ensure the long-term sustainability and competitiveness of country’s coal sector –

 

As per the current import policy, coal is kept under Open General Licence (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duties. Due to concerted efforts of the government, the import of coal has reduced from 264.5 MT in 2023-24 to 243.6 Mt in 2024-25.

For reducing dependence on imported coal and promoting domestic production, the Government has taken the following measures:-

i. Reducing the reliance on imported coal by boosting domestic production– This was done by facilitating allocation of coal blocks, encouraging private sector participation and streamlining the process for obtaining necessary approvals for coal mining projects. Additionally, the thrust is on increasing coal production by government coal companies by introduction of modern technologies like First Mile connectivity (FMC) and digitalization.

ii. Encouraging the domestic coal consumption– Towards this, an Inter-Ministerial Committee (IMC) was constituted for coal import substitution. IMC, through its various meetings, has identified Import Coal Based (ICB) plants where the supply of domestic coal may be examined. These plants have indicated their specific coal requirements and preferred CIL subsidiaries.

iii. Focusing on improving coal evacuation infrastructure/ coal supply chain– In line with Government of India directives, Coal companies have undertaken improvement in coal transportation and supply chain efficiency through construction of new Railway lines and First Mile Connectivity (FMC) projects in a phased manner.

iv. As regards fiscal measures, under the Revised Shakti Policy, 2025, the Imported Coal Based (ICB) Plants are allowed to secure coal under Window-II of the Policy.

This information was given by Union Minister of Coal and Mines Shri G. Kishan Reddy in a written reply in Rajya Sabha today.