Why in the News?

India achieved a historic milestone by surpassing one billion tonnes (BT) of coal production in March 2025, in FY 2024-25.

Government Initiatives driving success in Coal Sector 

• Enactment of Coal Mines (Special Provisions) CMSP Act- 2015: The Act permitted auction of coal mines for commercial mining by private entities.
  • In 2020, first commercial coal mining auctions were launched.
• Enactment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 [MMDR Act]: It enabled captive mines owners (other than atomic minerals) to sell up to 50% of their annual mineral (including coal) production in the open market
• Coal Logistics Plan & Policy, 2024: Formulated by the Ministry of Coal with the objective of developing resilient and cost -effective coal evacuation logistic system.
• Transparent auction mechanism: Commercial coal block auctions are conducted in a two-stage online competitive bidding process through National Coal Mine Safety Report Portal and the Mine Closure Portal.
• Coal Gasification Scheme for Cleaner Energy (2024): The initiative targets 100 million tonnes of coal gasification by 2030.

• Coal gasification converts coal into syngas, which can be used for producing methanol, ammonium nitrate, Synthetic Natural Gas (SNG), and fertilisers.
  • 'Mission Coking Coal': Aims to enhance coking coal supply to the Steel Sector and increase domestic coking coal production to 140 MT by FY 2029-30. 
  • Other measures:
    • National Coal Index (NCI), a price index combining the prices of coal from all the sales channels.
    • Single Window Clearance portal for the coal sector to speed up the operationalization of coal mining.
    • 100% Foreign Direct Investment (FDI) under the automatic route for coal mining and related activities. 

While discussions at UNFCCC (United Nations Framework Convention on Climate Change) are pushing for the phase-out of coal and developed countries are reducing coal dependence (Germany aims to phase out coal by 2038, UK closed its last coal plant in 2024), India has reiterated its stance regarding the importance of coal for energy and economic growth.

Significance of Coal in India's Development

• Primary Energy Source for Power Generation: Coal is responsible for 46.88% (as of November 2024) of India's total installed capacity for power generation (Power Ministry).
  • Key industries, including steel (8%) and cement (5%), also rely heavily on coal for energy.
• Resection in import dependency: Coal Imports decreased by 8.4% in April-December 2024 in comparison to the same period of FY 2023-24, leading to substantial foreign exchange savings and a reduction in import dependency.
• Meet growing energy demand: India's electricity consumption is expected to triple by 2050 [International Energy Agency (IEA)] driven by economic growth, rising incomes, and increasing electrification.
• Development of coal producing region: The coal sector contributes over ₹70,000 crore annually through royalties, GST, District Mineral Foundation (DMF) contributions etc. 
  • These funds play a crucial role in fostering socio-economic development and infrastructure enhancement in coal-producing regions.
• Job creation: Coal sector has a workforce of around 5 lakh mine workers across more than 350 coal mines.
• Other Economic Contributions:
  • Railway Freight: Coal is the largest contributor to Indian railway freight, representing 49% of total freight revenue (FY 2022-23).
  • Capital Expenditure and Infrastructure Development: The coal sector invests an average of ₹18,255 crore annually in capital expenditure over the past five years.
  • Corporate Social Responsibility (CSR): Coal sector PSUs prioritize CSR initiatives, with an average annual expenditure of Rs. 608 Crore over the past five years.

Key information about India's Coal Sector  India holds 5th largest coal reserves globally and is 2nd largest consumer of coal. Total estimated reserves of coal: 361.41 billion tonne (as on 2022). Top three states with highest coal reserves in India: Odisha, Jharkhand, Chhattisgarh (accounting for ~69% of India's total coal reserves)  Coal Mines (Nationalization) Act of 1973 serves as the central legislation governing the eligibility for coal mining in India. The auction-based regime introduced in 2014 permitted private sector participation, but it was restricted to captive use in their own end-use plants. In 2020, the sector was further liberalized with the opening up of commercial coal mining to private players. Types of coal found in India Anthracite: Highest grade of coal containing a high percentage of fixed carbon.  Bituminous: Medium grade of coal having high heating capacity, most commonly used for electricity generation in India.  Subbituminous: Black in colour, dull (not shiny) and has a higher heating value than lignite. Lignite: Lowest grade coal with the least carbon content.

Conclusion

Coal industry remains central to India's goal of becoming self-reliant and developed by 2047.Though advancements in safety, environmental protection techniques like flue Gas Desulphurization systems, and workforce welfare, the coal sector can building a strong foundation for future progress. Transitioning to supercritical technologies and co-firing biomass with coal can further reduce emissions while supporting sustainable energy production.