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    You are at:Home » India’s Strategic Push to Reduce Coal Imports and Boost Domestic Production

    India’s Strategic Push to Reduce Coal Imports and Boost Domestic Production

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    By Aruna Sharma on July 22, 2025 Infra

    The Government of India has implemented a series of comprehensive measures to reduce the country’s reliance on imported coal and strengthen domestic coal production. Coal is currently importable under the Open General License (OGL), allowing consumers to procure it at contractual prices upon paying the required duties. However, to encourage self-reliance, the government has been actively pursuing coal import substitution.

    To reduce dependency on imports, the Annual Contracted Quantity (ACQ) for power plants has been raised to 100% of normative requirements—reversing earlier reductions that limited supply to 70% or 90% depending on the plant’s location. This will ensure a more reliable domestic coal supply for power generation.

    The Non-Regulated Sector (NRS) linkage auction policy was amended in 2020 to extend the tenure of coking coal linkages to 30 years. This long-term security is expected to promote greater use of domestic coal over imports. Additionally, from 2022 onwards, coal companies have been directed to fulfill the entire Power Purchase Agreement (PPA) coal requirement for existing linkage holders, regardless of trigger levels or ACQ shortfalls.

    An Inter-Ministerial Committee (IMC) for coal import substitution was constituted in 2020, leading to the development of the Coal Import Monitoring System (CIMS). Since December 2020, coal has been classified as “Free subject to registration in CIMS,” enabling better oversight of imports. A strategy paper on coal import substitution has also been issued to guide these efforts.

    In March 2024, a new sub-sector under the NRS linkage auction—‘Steel using Coking coal through WDO route’—was introduced to increase domestic consumption and reduce coking coal imports. Simultaneously, the Coking Coal Mission was launched to boost indigenous supply to the steel industry.

    The Revised SHAKTI Policy, 2025, allows both Imported Coal Based (ICB) plants and Fuel Supply Agreement (FSA) holders to procure additional domestic coal beyond ACQ levels. This provision helps them reduce dependence on international markets.

    To scale up production, the government has taken further steps:

    • Frequent reviews of coal block development progress

    • The MMDR Amendment Act, 2021, which allows captive mine owners to sell up to 50% of their coal in the open market

    • The launch of a Single Window Clearance portal and Project Management Units to fast-track mine operations

    • Liberalized commercial mining rules since 2020, including 100% FDI, early production rebates, and transparent bidding mechanisms

    Public sector giants like Coal India Limited (CIL) are deploying modern technologies such as continuous miners, longwall mining systems, and digital tools in mega mines. Singareni Collieries Company Limited (SCCL) is expanding evacuation infrastructure and obtaining necessary clearances for faster coal output.

    These efforts have yielded measurable results. In FY 2024–25, coal imports dropped to 243.62 million tonnes from 264.53 million tonnes the previous year—saving nearly ₹60,681 crore in foreign exchange.

    India now meets most of its coal demand domestically. The Ministry of Coal has set an ambitious production target of 1.5 billion tonnes by FY 2029–30. In support of this, the Coal Logistic Plan and Policy launched in February 2024 will develop the infrastructure required for efficient coal transportation and distribution.

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    Aruna Sharma

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