Image Source: KSG India
India’s coal sector is set for a major transformation as the government intensifies efforts to attract private sector participation in coal exploration and mining, especially in the underground segment. This strategic shift is backed by a series of new policy measures and incentives aimed at boosting domestic coal production, reducing imports, and fostering sustainable mining practices.
Key Highlights:
Private Sector Participation Accelerates: The government has already awarded 18 out of 28 identified coal mining projects to leading private mining companies, marking a significant milestone in its push to leverage private expertise and capital for enhancing coal output. These projects, operated under the mining developer-cum-operator (MDO) model, are expected to streamline operations, improve efficiency, and lower costs across both opencast and underground mines.
Incentives for Underground Mining: In a decisive move to revitalize underground coal mining, the Ministry of Coal has slashed the floor revenue share from 4% to 2% and completely waived the mandatory upfront payment for new projects. These steps, along with a 50% rebate on performance security, are designed to lower entry barriers, make projects more financially viable, and accelerate private sector participation.
Focus on Technology and Sustainability: The reforms are expected to drive the adoption of advanced mining technologies—such as continuous miners, longwall systems, remote sensing, and AI-based safety mechanisms—making underground mining safer, more productive, and environmentally responsible. Underground mining is being promoted as a cleaner alternative, causing less surface disruption and supporting the government’s sustainability goals.
Rising Domestic Output: These measures come as India’s coal production crossed 1 billion tonnes in FY25, with underground mining still accounting for only about 4% of total output. The government aims to unlock the vast potential of underground reserves and further boost overall production to 1.13 billion tonnes in FY26.
Long-Term Vision: By opening up the sector to private players and incentivizing innovation, the government is not only targeting energy security and reduced import dependence but also positioning India as a global leader in sustainable coal mining.
With these bold reforms, India’s coal sector is poised for a new era of growth, efficiency, and environmental stewardship, driven by robust private sector engagement.
Sources: Economic Times Energy, Business Standard, Financial Express, Angel One, PIB
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