Coal Sector in India

Coal is a black rock that burns and gives energy. It formed over millions of years from buried plants. In India, coal is the biggest single source of energy and runs most of the country's power plants. The coal sector is the system of laws, companies and rules that decides who can mine coal, how it is sold and how it reaches power plants, steel plants and factories.

Why does coal matter so much for India?

India has large coal reserves but very little oil and gas. So coal is the cheapest home-grown fuel. Coal-based power plants produce the largest share of India's electricity. Coal is also needed for steel, cement, aluminium and fertiliser. For a growing country, a steady coal supply is like a steady supply of rice for a big family: if it stops, everything else is affected.

How much coal does India have?

• As per the Geological Survey of India (GSI), India's total coal resources were about 389,421 million tonnes (MT) as on 1 April 2024, counted up to a depth of 1,200 m.
• Odisha (about 99,204 MT), Jharkhand (about 91,812 MT) and Chhattisgarh (about 82,666 MT) together hold about 70% of it. West Bengal, Madhya Pradesh, Telangana and Maharashtra also have large reserves.
• Most Indian coal is found in the Gondwana rocks of peninsular India, mainly along river valleys like the Damodar, Mahanadi, Son and Godavari. A small amount of younger Tertiary coal is found in the North-East.
• Indian coal has high ash and lower heat value than coal from Indonesia or Australia.

Types of coal you should know

• Coking coal: Special coal used to make coke for blast furnaces in steel plants. India has little good-quality coking coal and imports most of it.
• Non-coking (thermal) coal: Used mainly to make electricity and in cement and other industries. Most of India's coal is of this type.
• By carbon content, from highest to lowest: anthracite (best, rare in India), bituminous (most common), lignite (brown coal; found in Tamil Nadu (Neyveli), Rajasthan and Gujarat), and peat (earliest stage).

Production and imports

• India produced 1,047.57 MT of coal in 2024-25 (provisional), crossing 1 billion tonnes in a year for the first time. It was 997.83 MT in 2023-24.
• Coal from commercial and captive mines rose to about 197.5 MT in 2024-25.
• Coal imports fell 7.9% to 243.62 MT in 2024-25, saving about $7.93 billion in foreign exchange.
• India is the world's second-largest producer and consumer of coal, after China.

Where did the system come from? (History)

• Before 1971: Most coal mines were privately owned. There were complaints of unsafe mining, poor wages and waste of coal.
• 1971–72: The government took over coking coal mines through an ordinance in October 1971, followed by the Coking Coal Mines (Nationalisation) Act, 1972. Bharat Coking Coal Limited (BCCL) was formed to run them.
• 1973: Non-coking coal mines were nationalised under the Coal Mines (Nationalisation) Act, 1973.
• 1975: Coal India Limited (CIL) was set up as the holding company for the nationalised mines. It works under the Ministry of Coal and produces most of India's coal through its subsidiaries. It received Maharatna status in April 2011.
• 1993: Private and public companies were allowed captive mining, meaning they could mine coal only for their own use (for example, a steel plant or power plant).
• 2014 (Coalgate): On 25 August 2014, the Supreme Court held the allocation of coal blocks since 1993 to be illegal. By its order of 24 September 2014, it cancelled 204 coal blocks. The case is known as Manohar Lal Sharma v. Principal Secretary.
• 2015: Parliament passed the Coal Mines (Special Provisions) Act, 2015 to re-allocate these blocks through transparent e-auctions and allotments.
• 2020: The Mineral Laws (Amendment) Act, 2020 removed end-use limits. On 18 June 2020, the Ministry of Coal launched the first auction of 41 blocks for commercial coal mining, where the winner can sell coal in the open market. Bidders compete on revenue share paid to the state.
• 2021: The Mines and Minerals (Development and Regulation) Amendment Act, 2021 allowed captive mines to sell up to 50% of their yearly output in the market after meeting their own needs.

Who controls coal under the Constitution?

• Entry 54 of the Union List: Parliament can regulate mines and mineral development to the extent it declares this to be in the public interest by law.
• Entry 23 of the State List: States regulate mines and minerals, but subject to Entry 54.
• Because Parliament has made central laws (like the MMDR Act, 1957 and the coal nationalisation laws), coal is largely controlled by the Centre. States still get royalty and auction money, since the minerals lie in their land.

How does coal reach users?

1. Coal is mined by CIL subsidiaries, Singareni Collieries Company Limited (SCCL, owned by Telangana and the Centre), captive miners and commercial miners.
2. Most coal is given to power plants under long-term supply deals called coal linkages. The SHAKTI policy (2017) made the award of new linkages transparent through auctions.
3. Some coal is sold through e-auctions to other buyers.
4. Coal moves mostly by rail. Coal is the largest single item carried by Indian Railways.

Commonly confused concepts

• Captive vs commercial mining: A captive mine can use coal only in the owner's own plant (with some sale now allowed). A commercial mine can sell all its coal to anyone.
• Coal reserves vs resources: "Resources" is the total coal found. "Reserves" is the part that can be mined profitably with today's technology. GSI's 389 billion tonnes figure is resources.
• Coking vs thermal coal: Coking coal is for steel; thermal coal is for power.
• Coal phase-out vs phase-down: At COP26 in Glasgow (2021), India pushed for the wording "phase down" of unabated coal power instead of "phase out". Phase down means reducing step by step, not ending fully.
• Coal bed methane vs coal gasification: Coal bed methane is natural gas already trapped inside coal seams and simply pumped out. Coal gasification makes gas by reacting coal with oxygen and steam.

Issues, criticism and the way forward

• Pollution and climate: Coal is the most polluting fuel. It releases CO₂, fly ash, sulphur dioxide and tiny particles that harm health. India has promised net zero by 2070.
• Displacement and forests: Most coal lies under forests and tribal lands in Jharkhand, Odisha and Chhattisgarh. Mining can displace people and damage forests, rivers and wildlife.
• Quality and logistics: High-ash coal, slow rail movement and congestion lead to shortages at power plants during peak demand.
• Just transition: Millions of workers and whole districts depend on coal. Moving away from coal must be fair to them, with new jobs and skills.
• Way forward: cleaner uses of coal such as gasification, washing coal to reduce ash, better rail links, careful mine closure and reuse of land, and steady growth of renewable energy alongside coal.

Concepts to Know

• Nationalisation: When the government takes ownership of private companies or mines.
• Captive mine: A mine given to a company to supply its own factory or power plant.
• Maharatna: The highest status given to large, profitable central public sector companies, giving their boards more freedom to invest.
• Royalty: A payment made to the state government for every tonne of mineral taken out of its land.
• Ash content: The part of coal that does not burn and is left over as ash. More ash means lower quality coal.