India’s Coal Sector: From Black Gold to Next-Gen Fuel

Syllabus: GS3/Energy

Context

• India’s coal sector has emerged as a next-generation fuel aligned with India’s development goals towards Viksit Bharat 2047 by integrating with green technologies.

Coal Sector in India

• Evolution (1774 to Independence): Commercial coal mining in India began in 1774 with the Raniganj coalfield.
  • It expanded rapidly under British rule, powering steam locomotives and industries.
  • The Bengal Coal Company (est. 1855) and the Howrah–Raniganj rail link (1853) laid the foundation for India’s industrial coal economy.
• Post-Independence: National initiatives like the Singareni Collieries (1920) and National Coal Development Corporation (1956) introduced state participation.
  • However, early production inefficiencies and safety concerns persisted.

• Policy Interventions and Nationalisation (1950s–1990s): Nationalisation in the 1970s aimed to stabilise output and ensure worker safety, but it slowed innovation.
  • The Freight Equalisation Policy (1952–1995) hindered mineral-rich eastern states like Jharkhand, Odisha, and Chhattisgarh by disincentivising local industrialisation.
  • Private participation came in 1993, but inefficiencies, corruption, and block misallocations led to a Supreme Court-mandated cancellation of over 200 coal blocks (2014), triggering the most comprehensive reform in India’s coal history.

Major Concerns and Issues in India’s Coal Industry

• Rising Dependence on Coal Despite Renewable Push: Coal demand rose 8% YoY due to peak demand reaching 250 GW, despite record renewable capacity.
  • The government continues to expand domestic coal production, which raises conflict with COP28 climate commitments.
• Environmental and Sustainability Challenges: CPCB reported severe air pollution around mining regions of Jharkhand, Chhattisgarh, and Odisha.
  • Illegal mining, poor mine reclamation, and groundwater contamination are recurring problems.
  • Coal India Limited (CIL) faces penalties for not meeting green norms in over 60% of its mines.
• Transport and Infrastructure Bottlenecks: The Coal Ministry’s recent review identified transport congestion as a key issue like railway rake shortages delaying supply to power plants.
  • Over 10,000 MW of capacity ran below optimal levels due to coal logistics constraints.
  • New Dedicated Freight Corridors (DFCs) for coal are under planning, but implementation delays persist.
• Financial and Operational Inefficiencies: Coal India’s productivity still lags global standards, output per employee is 30% below global average.
  • Delays in land acquisition and clearances add to operational costs.
  • Imported coal prices volatility affects blending and power tariffs.
• Labor and Safety Concerns: Mine safety remains a major concern. DGMS (Directorate General of Mines Safety) recorded 36 fatalities in 2025.
  • Contractual labor accounts for over 45% of the coal workforce, with frequent strikes demanding wage revision.
• Climate and Just Transition Debate: COP28 commitments and India’s 2070 Net Zero target have intensified debates on phasing down coal.
  • India lacks a ‘just transition’ plan for 13 coal-dependent districts.
  • No clear reskilling or compensation mechanisms are in place for affected workers.
• Import Dependency and Energy Security: India imported over 220 million tonnes of coal in 2025, up 9% from 2024.
  • Domestic production grew slower than consumption, mainly due to monsoon disruptions and equipment shortages in CIL subsidiaries.
  • The government’s Mission Coking Coal is lagging behind targets for steel-grade coal.
• Policy Uncertainty and Regulatory Delays: Frequent changes in auction rules and mine lease renewals have discouraged private participation.
  • The Coal Auction Round (2025) saw only 35% of offered mines receiving bids.

Key Reforms & Initiatives (2014–26)

• Coal Mines (Special Provisions) Act 2015 and Mines and Minerals (Development and Regulation) Amendment Act, 2015: These enabled transparent auctions, opened commercial coal mining, and brought India’s coal policy in line with global best practices.
• Record Production: India produced 1,029 million tonnes (MT) in FY2024–25, crossing the 1-billion-tonne mark for the first time.
  • Coal India Limited (CIL) contributed 773 MT.
  • Singareni Collieries Company Ltd (SCCL) produced 83 MT.
  • Captive and Commercial Mines: Over 170 MT.
• Import Reduction: Coal imports for power dropped by over 20% in FY2024–25, saving India nearly ₹30,000 crore in foreign exchange.
• Revenue Growth: Coal auctions generated ₹58,000 crore cumulative revenue to states.
• Employment Impact: Over 13 million direct and indirect jobs are linked to the coal value chain.
• Future Target: The Ministry of Coal targets 1.25 billion tonnes of production and 1.5 billion tonnes by 2030.

Clean Coal and Technology Integration

• Coal Gasification Mission 2030: Targeting 100 MT of coal gasification annually by 2030.
• Underground Coal Gasification (UCG) Projects: First-ever auction of UCG blocks announced in 2025, focusing on cleaner fuel conversion.
• Washed Coal & Efficiency: More than 35 coal washeries under construction to reduce ash content and enhance thermal efficiency.
• Carbon Capture Pilots: NTPC, CIL, and NLC India jointly operate carbon capture and utilisation (CCU) projects.
• Digital Mines: Over 350 mines equipped with drone-based monitoring, IoT-enabled sensors, and satellite surveillance through the Coal Mine Surveillance and Management System (CMSMS).
• Coal Exchange: It aims to enable real-time price discovery, fostering a transparent market-based mechanism.

Road to Viksit Bharat 2047

• India’s coal policy balances energy independence, environmental responsibility, and economic resilience, and India envisions an integrated low-emission coal ecosystem where:
  • Coal mining is digitised, automated, and circular.
  • Coal coexists with renewables and green hydrogen.
  • India emerges as a global benchmark in sustainable resource management.

Source: BL