India’s Coal Sector Under Transformation: Production Expected to Grow 6-7% in Future

India’s coal sector is undergoing a significant transformation, marked by increased domestic production, reduced import dependency, and a strategic shift towards value-added products.

Domestic coal production has surged, rising by 11.65% to 997.26 million tonnes in 2023-24, from 893.19 million tonnes in the previous year. To meet the growing demand, which reached 1,233.86 million tonnes in 2023-24, the government aims to boost production to 1.5 billion tonnes by 2029-30.

Recognising the critical role of washed coking coal in the steel industry, the government has introduced a new sub-sector for steel-using coking coal through the Washery Development Organization (WDO) route. This initiative aims to enhance the availability of washed coking coal by monetising old washeries and ensuring long-term coal linkages for the steel sector.

To reduce reliance on imported coking coal, the government has launched Mission Coking Coal, targeting a domestic production of 140 million tonnes by 2030. Additionally, the blending of coking coal is being increased from 10-12% to 30-35% to optimise resource utilisation.

The government has also approved a financial support scheme of ₹8,500 crores to promote coal gasification projects. This initiative aims to add value to coal by converting it into clean fuels and chemicals, reducing import dependency, and creating new economic opportunities.

To further strengthen India’s position in the global coal market, the government is actively promoting coal exports. With an estimated export potential of 15 million tonnes to neighbouring countries, India aims to become a significant coal exporter. The approved scheme covers projects under three categories with a total incentive payout of ₹8500 crores.

• Category I, with a provision of ₹4,050 crores, is for Government PSUs. They can submit proposals for funding assistance, and three selected projects will receive a maximum grant of ₹1350 crores or 15% of project cost, whichever is lower than VGF.
• Category II, with ₹3850 crores, is available to both private sector and government PSUs with a maximum grant of ₹1,000 crores or 15% of project cost, whichever is lower as VGF.
• Category III, allocates ₹600 crores for demonstration or small-scale projects with a maximum outlay per project of ₹100 crores or 15% of project cost, whichever is lower.

The coal sector’s transformation is expected to have a far-reaching impact on the Indian economy. By increasing domestic production, reducing imports, and promoting exports, the government aims to enhance energy security, create employment opportunities, and generate revenue. This strategic approach positions India as a global coal leader while contributing to sustainable development.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.