India’s Strategic Drive Towards Coal Self-Reliance: A Decade of Positive Trends

New Delhi: India, boasting the world’s fifth-largest coal reserves, has emerged as the second-largest consumer of coal globally, driven by a rapidly expanding economy. The power sector, experiencing a compounded annual growth rate (CAGR) of approximately 7.5% from FY 2021-22 to 2023-24, along with other sectors, fuels the demand for coal.

Despite this significant coal consumption, the nation faces challenges due to the unavailability of coking coal and high-grade thermal coal within its reserves, necessitating imports to meet the needs of vital industries like steel. However, India is abundantly endowed with medium and low-grade thermal coal domestically, emphasizing the importance of sufficient domestic production to meet the growing demand.

Over the past decade, concentrated efforts to boost coal production have yielded a positive trend. Notably, from 2004 to 2014, the CAGR of imported coal’s share in the total consumption basket stood at 13.71%. In contrast, from 2014 to 2024, this figure plummeted to around -2.7%. The trend of coal imports over the past five years (excluding imports for imported coal-based thermal power plants) reveals a decline in the share of imported coal in the total consumption, showcasing a reduction from 21.05% in the previous fiscal year (Apr-Dec) to 19.38% in the corresponding period of the current fiscal year. This reduction translates to significant forex savings amounting to around Rs. 82,264 crores.

In alignment with Prime Minister Narendra Modi’s vision, the incorporation of advanced technology has significantly enhanced the production capacity of public sector undertakings. Coal India Limited has experienced a growth rate exceeding 10%. Furthermore, the transparent auction mechanism for coal blocks, devoid of end-use restrictions, has started yielding favorable outcomes. The consistent upward trajectory of coal production from captive and commercial sources over the past five years underscores an impressive CAGR of around 22.50%, a testament to the supportive role rendered by State Governments.

For the fiscal year 2024-25, domestic coal production is projected to reach 1111 MT, while domestic demand is estimated at 1290 MT. Consequently, the share of imported coal is anticipated to reduce below 15%, potentially yielding substantial forex savings.

With a strategic focus on optimizing indigenous coal resources and leveraging innovative technological solutions, India continues its journey towards self-reliance or Atmanirbhar in the energy security of the nation. The positive trends over the past decade signal a promising future for India’s coal sector, aligning with the broader goal of fostering economic growth and sustainability.