India's Coal Industry: A Vital Force for Global Leadership and Sustainable Development

Overview of India's Coal Industry

India ranks 5th in coal reserves and is the 2nd largest consumer of coal worldwide.

Coal energy consumption per capita is still less than in China, the USA, or OECD countries.

The proportion of coal in installed capacity has dropped from 60% in 2014–15 to 47% now.

It has surpassed 1 Billion Tonnes in both production and dispatch for FY25.

It strengthens India's energy security, providing a dependable and affordable power supply.

The coal sector has played a major role in job creation, aiding over 500,000 employees in over 350 coal mines.

Importance of the Coal Industry in India

Foundation of India’s Energy Security: Coal accounts for 46.88% of India’s overall installed power capacity (as of Nov 2024), establishing it as the foremost contributor to electricity production.

Although solar and wind energy are on the rise, coal is expected to maintain a 55% share of electricity generation by 2030.

Strategic Function in Key Sectors: The steel industry reliant on coal utilizes coking coal in blast furnaces — India intends to generate 140 MT of local coking coal by 2029–30 as part of Mission Coking Coal.

Economic Driver of Mineral-Wealthy Areas: Coal extraction generates more than ₹70,000 crore each year via royalties, GST, and District Mineral Foundation (DMF) resources.

Key Job Provider: The coal industry hires approximately 500,000 employees at over 350 mines.

Railway Revenue Component: Coal is the primary source of freight revenue for Indian Railways, accounting for 49% of total freight earnings (FY 2022–23).

Corporate Social Responsibility and Nation Building: Coal PSUs allocate more than ₹600 crore each year for CSR — investing in schools, hospitals, skill development centers, and community support in underdeveloped areas.

Challenges Confronting India's Coal Sector

Coal Supply Deficiencies: India has faced intermittent coal deficits, resulting in electricity emergencies.

Elements like stagnant local production, transportation delays, and decreased imports have led to supply limitations.

Environmental and Sustainability Concerns: These comprise deforestation, air contamination, and carbon dioxide emissions.

Although India is advocating for coal gasification and more environmentally friendly mining practices, the change is progressing gradually.

Reliance on Coal Imports: Even with the fifth-largest coal reserves, India continues to import coal to satisfy demand.

Elevated import expenses and worldwide price variations present financial difficulties.

Infrastructure and Transportation Constraints: Coal transport is heavily dependent on railways, which frequently experience congestion and delays.

Enhancing logistics and infrastructure is essential for securing prompt coal delivery.

Social and Labor Issues: Coal mining provides jobs to more than 500,000 workers, yet safety hazards, community displacement, and insufficient rehabilitation initiatives continue to be urgent concerns.

Recent Significant Changes in the Coal Industry

Commercial Coal Mining (2020): It enables private entities to engage in coal auctions. It boosted competition, enhanced efficiency, and drew in investments, resulting in greater production and job creation.

The Coal Bearing Areas Act of 1957 indicated state oversight but showed little faith in private enterprise.

Coal Mines Special Provisions Act (CMSP Act 2015): It was established to tackle the Supreme Court's cancellation of coal block allocations.

It established an open auction system that promotes private sector participation and produces income for the government.

SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation (updated in 2025): It provides enhanced flexibility, broader eligibility, and improved access to coal, aiding India's energy requirements.

Single Window E-Auction System: It eliminates market distortions, enhances operational efficiency, and guarantees equitable pricing across all sectors.

Reopening of Disused Coal Mines: India has launched measures to restart abandoned and closed coal mines with the involvement of the private sector.

Promote Underground Coal Mining: Implement incentives such as eliminating initial payments and decreasing revenue sharing obligations to stimulate private investment and the use of modern mining technologies.

Coal Gasification and Sustainable Mining: India aims to gasify 100 million tonnes of coal by 2030, aiming to lower carbon emissions and promote cleaner energy alternatives.

Funding assistance and tax benefits have been implemented to expedite coal gasification initiatives.

Tech-Driven Transformation: Coal Market and DigiCoal

India is set to introduce its inaugural coal trading exchange for smooth, clear access and pricing.

DigiCoal project aimed at digital transformation of coal mines:

5G, AI surveillance, GPS location tracking, drone assessments

Digital replicas for operational safety and effectiveness.

Envisioning the Future: Developed India 2047

From today's 1.10 MWh per capita electricity usage to aligning with or surpassing global averages.

India's path to achieving a $5 trillion economy by 2030 and $35 trillion by 2047 relies on dependable energy access.

Coal will continue to be essential, supported by renewable energy sources.