India’s Coal Industry Poised for Transformation in 2025

India’s coal industry is on track for significant expansion and modernization in 2025, with government initiatives aimed at meeting the growing energy demands and enhancing the efficiency of the coal market.

Launch of India’s First Coal Trading Exchange

India is preparing to introduce its inaugural coal trading exchange in 2025. This new platform will streamline coal trading, incorporating a clearing and settlement mechanism to enhance market accessibility and efficiency. The draft proposal for the exchange is currently undergoing inter-ministerial consultations.

Meeting Coal Production Targets Amid Economic Growth

As India’s economy grows, the government is focused on increasing coal production to meet the rising energy demand. From April to November of this fiscal year, coal production rose by 6.21%, totaling 628.03 million tonnes (MT), up from 591.32 MT in the corresponding period last year.

Advancing Coal Gasification Technology

Coal gasification, a cleaner and more efficient method compared to traditional coal combustion, is a priority in India’s energy transition strategy. The government aims to scale up this technology to help reduce carbon emissions. To support this initiative, the government introduced the Coal Gasification Incentive Scheme with a budget allocation of Rs 8,500 crore, aimed at promoting the production of synthesis gas, synthetic natural gas, methanol, ammonia, and other essential by-products.

Rising Demand for Thermal and Coking Coal

Thermal coal production is expected to grow by 8-10% in response to higher electricity consumption. Thermal coal imports are expected to remain stable at 200-210 million tonnes in 2025.

India is also poised to remain a major force in global coking coal demand, driven by plans to increase its steel production capacity to 300 million tonnes by 2031. India’s steel output is forecasted to rise by 6% in FY25, further driving the need for coking coal.

Boosting Domestic Coal Supply

India’s domestic coal output is expected to rise. In 2023, the coal ministry allocated 10 coking coal blocks with a combined output potential of 22.5 million tonnes, slated to commence production in 2025. Coking coal output is expected to increase from 67 million tonnes in FY24 to a range of 71-73 million tonnes in FY25.

Policy Reforms and Sustainable Development

The government has revised the mine allocation policy, eliminating the pre-2014 system and ensuring that coal blocks are granted only when there is a clear commitment to commence mining. Incentives are offered for early production, while delays attract penalties. The government is also focused on fostering a sustainable coal industry that balances environmental concerns with the needs of coal-dependent communities.

These initiatives position India’s coal sector to play a crucial role in meeting the country’s energy needs while advancing cleaner coal technologies.