Tuesday's Talking Points
India’s Coal Production surpasses 1 Billion Tonnes in this Fiscal Year!
What’s the Point?
India has achieved a historic milestone, surpassing 1 billion tonnes (BT) of coal production for FY25 on March 20, 2025, reinforcing the Government’s commitment to energy security and self-reliance. While this number is a provisional estimate, as per the Monthly Statistical Report published by Ministry of Coal, the production in FY25YTD (till January 2025) is 6% higher than FY24YTD (till January 2024). The Ministry of Coal has set an ambitious target of 1.08 billion tonnes for FY25. With coal accounting for 55% of the country's energy need, this target aligns with the Government’s vision of reducing import dependence and strengthening domestic energy supply to support economic growth vision. The Union Minister of Coal and Mines, Mr. G. Kishan Reddy, highlighted that this achievement underscores India's focus on modern mining technologies and improved coal extraction efficiency. With continued policy support, investment in infrastructure, and advanced mining practices, India is poised to enhance domestic production further while ensuring a reliable energy supply to meet its growing industrial and economic demands.
Numbers in Perspective
Source: Ministry of Coal; *T: Targeted Product, **AP: Achieved (Provisional), @Imports between April 2024 and December 2024
Key Steps taken by the Government to ensure Adequate Coal Availability and enhance Coal Production in India
1) Regular reviews by Ministry of Coal to expedite the development of coal blocks
2) Enactment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 for enabling captive mines owners (other than atomic minerals) to sell up to 50% of their annual mineral (including coal) production in the open market after meeting the requirement of the end use plant linked with the mine
3) Single Window Clearance portal for the coal sector to speed up the operationalization of coal mines
4) Project Monitoring Unit for hand-holding of coal-block allottees for obtaining various approvals / clearances for early operationalization of coal mines
5) Auction of commercial mining on revenue sharing basis with rebates allowed for the quantity of coal produced earlier than scheduled date of production under the commercial mining scheme
6) Liberal terms and conditions of commercial coal mining like no restriction on utilization of coal, allowing new companies to participate in the bidding process, reduced upfront amount, transparent bidding process, etc.
Key Steps taken by the Ministry of Coal to reform the Industry
1) Power Sector Linkage Policy (SHAKTI) – The Government approved the fading away of the Letter of Assurance – Fuel Supply Agreement regime and introduced Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI), 2017, which was issued by the Ministry of Coal in May 2017, with amendments approved to the SHAKTI Policy in 2019 and 2023. As per PIB’s Press Release (December 2024), various coal linkages have been granted to ensure transparent and efficient coal allocation to power plants, particularly those based on domestic coal, through a combination of auctions and direct linkages.
2) Rationalization of Coal Linkages – This has resulted in decrease in transportation cost from the mines to the power plants leading to more efficient coal base power generation. As per PIB’s Press Release (September 2023), 4 rounds of rationalization of linkage have taken place, covering 73 Thermal Power Plants, out of which 58 belong to State / Central Generating Companies and 15 to Independent Power Producers. The rationalization of linkage has resulted in the rationalizing of total 92.16 MT of coal, with annual potential saving of around ₹6,420 crore.
3) Third Party Sampling – Standard Operating Procedure for Third Party Sampling were introduced in 2015 at the loading end to ensure the quality of coal supplied by the coal companies, for which Central Institute for Mining and Fuel Research were engaged jointly by coal companies and power sector.
4) Increasing the Ease of Doing Business through First Mile Connectivity – First Mile Connectivity project aims to ease the life of people residing in coal mine areas by reducing traffic congestion, road accidents, adverse effects on environment and health around coal mines and by enhancing coal handling efficiency through employing alternate transport methods like mechanized conveyor system and computerized loading into railway rakes.
5) Reduction in Dependency on Imports – The Ministry of Coal has reduced reliance on imported coal, with imports declining by 5.35% between April and November 2024, saving over ₹30,000 crore. Notably, coal imports for domestic power plant blending fell by 23.56%. The Ministry’s “Mission Coking Coal” aims to increase domestic coking coal production to 140 MT by FY30, thereby reducing dependency on imports in the steel sector.
How has India’s Usage of Coal changed?
While India is the second largest producer of coal after China, its usage has changed with time. For example, in power generation – a primary utilizer of coal – the use of coal has reduced, with installed power capacity from coal dropping from 60.7% in FY16 to 47.3% in FY25YTD (Refer left Chart). This can be attributed to cost competitiveness of non-fossil fuel-based power sources like solar, and Government initiatives like PM-KUSUM Scheme and PM Surya Ghar: Muft Bijli Yojana. Despite this shift, coal continues to be a primary source of energy security due to the rise in its usage in absolute amount for meeting India’s rising electricity demand, intermittency issues in non-coal sources, dependency of heavy industries on coal and higher share of coal in railway freight revenue.
Sources: Ministry of Coal, PIB, NITI Aayog, PwC Report, and other publicly available information
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