Government Reduces Revenue Share for Underground Coal Mining

The Ministry of Coal has launched a transformative initiative aimed at revitalising India’s coal sector, with a special focus on underground mining.  

This forward-looking policy package addresses long-standing challenges in the segment, such as high capital requirements and extended gestation periods, by offering a range of financial incentives and strategic reforms. The initiative aligns with the government’s broader vision of sustainability, innovation, and energy security. 

Key Incentives for Underground Mining 

To make underground coal mining more financially viable and attractive to investors, the Ministry has announced two major incentives: 

• Reduction in Revenue Share: The floor revenue share has been reduced from 4% to 2%, offering significant fiscal relief to developers and improving project economics. 

• Waiver of Upfront Payment: The requirement of upfront payments has been completely waived for underground coal mining projects. This move lowers entry barriers and promotes faster project initiation, especially from the private sector. 

These steps build on the existing provision of a 50% rebate on performance security for underground mining blocks, further enhancing investor confidence. 

Pushing for Modernisation and Efficiency 

With a focus on sustainability and technological advancement, the reforms are expected to drive the adoption of advanced mining technologies. These include: 

• Continuous miners 

• Longwall systems 

• AI-powered safety systems 

• Remote sensing and monitoring tools 

These tools will help maximise productivity while minimising environmental disruption, positioning underground mining as a more sustainable alternative to traditional opencast methods. 

Also Read: India’s Coal Sector Achieves Record Growth in FY25: Production Soars 29.79%! 

Environmental and Economic Impact 

Underground coal mining is known to be significantly less intrusive to the surface environment. By encouraging this method, the government aims to reduce carbon footprints and promote ecological balance. The policy also opens up avenues for job creation, skill development, and localised economic growth, contributing to India’s Atmanirbhar Bharat mission. 

Conclusion 

The Ministry of Coal’s policy reforms mark a strategic pivot toward a more sustainable, technologically advanced, and investment-friendly coal sector. These initiatives are expected to unlock the untapped potential of underground coal mining in India, boosting efficiency, enhancing safety, and supporting the nation’s long-term energy goals. 

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