Navigating India’s Coal Imports and Production: A Path to Energy Security

India possesses a significant amount of coal reserves, having 5th rank across the world. India is the 2nd largest consumer of coal globally, driven by its rapidly growing economy. However, the country faces a critical shortfall in domestic reserves for specific types of coal, notably coking coal and high-grade thermal coal, which are vital for key industries like steel production. As a result, India must rely on coal imports to meet the demand in these sectors.

During the April-August period of FY 2024-25, coal imports increased marginally by 2.2%, reaching 111.20 million tonnes (MT) compared to 108.81 MT in the same period of the previous year. However, the non-regulated sector saw a significant decline of 10.3% in imports during the same period, highlighting a shift in consumption patterns. Data from the Directorate General of Commercial Intelligence and Statistics (DGCIS) indicates this trend.

Rising Coal Imports

In contrast to the overall increase in imports, coal-based power generation saw a notable 4.97% growth from April to September 2024 compared to the same period last year. However, coal imports for blending purposes decreased from 10.70 MT to 9.79 MT, reflecting an 8.5% decline. This reduction is in line with India’s broader objective to achieve greater self-sufficiency in coal production and reduce dependency on imports.

The growth in coal imports for the power sector can largely be attributed to the increase in coal purchases by imported coal-based power plants, which are designed specifically to use imported coal. These plants imported 26.14 MT during the April-September 2024 period, a 53.1% increase from the 17.07 MT imported during the same period last year.

Increase in Coal Production

On the domestic front, India’s coal production showed a commendable increase, reaching 453 MT during the April-September 2024 period, up from 428.21 MT in FY 2023-24. This represents a growth of 5.79%, reflecting the government’s concerted efforts to improve coal production and meet the growing energy needs of the country.

Despite this increase in production, the overall cost of coal imports in value terms has decreased. The price of imported coal during the April-August 2024 period was Rs. 120,532.21 crore, compared to Rs. 133,461.65 crore during the same period in the previous year. This reduction has resulted in a saving of approximately Rs. 12,929.44 crore, or about 9.69%, highlighting the potential cost benefits of strategic coal procurement.

To further support the nation’s coal supply and enhance energy security, the Ministry of Coal continues to implement strategic initiatives aimed at boosting domestic coal production. These efforts not only aim to safeguard foreign exchange reserves but also contribute to the long-term sustainability of India’s energy landscape by reducing its reliance on coal imports.

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.