Context:
Coal has traditionally served as the cornerstone of India’s energy landscape, powering industries, electricity generation, and supporting the nation’s economic development. However, with a growing global emphasis on sustainability and clean energy, India’s approach to coal usage is undergoing a critical transformation.

Overview of India’s Coal Sector

• India holds the world’s 5th largest coal reserves and ranks as the 2nd largest consumer of coal globally.
  • Despite this, its per capita coal energy consumption remains significantly lower than that of China, the United States, and OECD countries.
  • Coal’s share in India’s total installed power generation capacity has declined from 60% in 2014–15 to 47% today, reflecting a gradual shift towards diversification and cleaner energy sources.
• In FY 2024–25, India surpassed the milestone of 1 billion tonnes in both coal production and dispatch.
  • This achievement strengthens national energy security and contributes to a stable, cost-effective power supply.
• The coal sector is also a major source of employment, supporting over 500,000 workers across more than 350 coal mines nationwide.

Significance of the Coal Sector in India

• Pillar of Energy Security
  Coal remains the cornerstone of India’s energy framework, accounting for 46.88% of the country’s total installed power capacity as of November 2024 — the largest share among all energy sources.
  • Despite increasing adoption of renewable energy, coal is expected to maintain a dominant 55% share in electricity generation by 2030.
• Strategic Input for Core Industries
  The steel industry, a key driver of industrial growth, relies heavily on coking coal for blast furnace operations.
  • Under Mission Coking Coal, India targets production of 140 million tonnes (MT) of domestic coking coal by 2029–30 to reduce import dependence and support steel sector expansion.
• Economic Driver for Mineral-Rich States
  Coal production contributes over ?70,000 crore annually to the exchequer through royalties, GST, and District Mineral Foundation (DMF) funds, significantly bolstering state and local economies.
• Major Source of Employment
  The coal sector provides direct employment to approximately 5 lakh (500,000) workers across more than 350 active mines, playing a crucial role in livelihoods and regional development.
• Backbone of Railway Freight Revenue
  Coal is the single largest freight commodity for Indian Railways, accounting for 49% of total freight earnings in FY 2022–23, thus supporting both energy logistics and railway finances.
• Driver of Inclusive Development through CSR
  Coal Public Sector Undertakings (PSUs) collectively invest over ?600 crore annually in Corporate Social Responsibility (CSR) initiatives.
  • These efforts support schools, healthcare facilities, skill development centers, and community infrastructure, particularly in underdeveloped and mining-affected regions

Challenges Facing India’s Coal Sector

• Periodic Coal Supply Shortages
  India continues to face intermittent coal shortages that have led to power disruptions in recent years.
  • Contributing factors include stagnating domestic production, logistical bottlenecks, and declining coal imports due to high global prices and policy shifts.
• Environmental and Sustainability Concerns
  Coal mining and combustion contribute to deforestation, air pollution, and greenhouse gas emissions.
  • Although efforts are underway—such as promoting coal gasification and cleaner technologies—the pace of transition to sustainable practices remains gradual.
• Reliance on Coal Imports
  Despite having the world’s fifth-largest coal reserves, India imports significant volumes of coal to meet domestic demand.
  • High import costs and volatility in global prices present financial risks and energy security concerns.
• Infrastructure and Transport Bottlenecks
  Coal transportation depends heavily on railways, which are often overburdened, leading to supply chain delays.
  • Expanding and modernizing logistics infrastructure is critical for uninterrupted coal flow to end-users.
• Social and Labor Issues
  The coal industry employs over 500,000 workers, but challenges persist in terms of worker safety, community displacement, and insufficient rehabilitation and resettlement programs.
  • Addressing these concerns is essential for social equity and sustainable mining.

Recent Key Reforms in the Coal Sector

• Commercial Coal Mining (2020)
  Opened coal mining to private players for the first time, enhancing competition, boosting productivity, and attracting investments.
  • Marked a shift from state dominance (as under the Coal Bearing Areas Act, 1957) to a more open and innovation-driven model.
• Coal Mines (Special Provisions) Act, 2015
  Enacted to ensure transparent reallocation of coal blocks post-Supreme Court cancellations.
  • Introduced competitive auctions, encouraged private sector participation, and increased government revenue.
• SHAKTI Policy (Revised 2025)
  The Scheme for Harnessing and Allocating Koyala Transparently in India now offers broader eligibility, greater allocation flexibility, and improved access for power producers, supporting energy stability.
• Single Window E-Auction System
  Simplifies coal sales and allocation, eliminates market distortions, and ensures fair pricing and ease of access across user sectors.
• Revival of Abandoned Coal Mines
  Policies are in place to reopen discontinued mines with private sector involvement, aiming to optimize coal extraction and enhance resource efficiency while addressing environmental concerns.
• Promotion of Underground Mining
  Incentives—such as exemption from upfront payments and lower revenue share requirements—are aimed at encouraging advanced underground mining techniques with lower ecological footprints.
• Coal Gasification and Clean Energy Transition
  India targets the gasification of 100 million tonnes of coal by 2030 to reduce emissions and create value-added products.
  • Financial and tax incentives have been introduced to accelerate adoption.

Tech-Driven Transformation: Coal Exchange and DigiCoal

• National Coal Exchange (Upcoming)
  A first-of-its-kind trading platform to facilitate transparent coal pricing and streamlined access for buyers across sectors.
• DigiCoal Initiative
  A digital overhaul of coal mining operations using:
  • 5G, AI-based monitoring, GPS tracking, drone surveys, and
  • Digital twins to enhance operational safety, monitoring, and productivity.

Future Vision: Viksit Bharat @2047

• Energy for Economic Ambitions
  India aims to grow from a current per capita electricity consumption of 1.10 MWh to levels on par with developed nations.
  • Achieving a $5 trillion economy by 2030 and a $35 trillion vision by 2047 will require robust, reliable, and affordable energy.
• Balanced Energy Mix
  Coal will continue to play a central role in ensuring energy security—complemented by aggressive renewable energy expansion and sustainable practices

Source: PIB