Fueling the Future: India Hits Historic High in Coal Might

Image Source: Nagaland Post

India will register a historical high of 1.15 billion tonnes of coal production in FY26, a spectacular jump in energy self-sufficiency. The achievement follows record 1,047.6 million tonnes production in FY25, supported by across-the-board policy overhauls, surging power demand, and a strategic drive to de-risk import dependence.

Growth Drivers

Domestic coal production has increased at a 10 percent average rate per annum during a five-year period.

Coal India Limited (CIL) remains the backbone of the industry, producing 74 percent of FY25 production.

Private and captive producers have expanded production, facilitated by improved logistics and mining technology.

March 2025 auctions of coal blocks allocated 28 new mines in the 12th round to further boost supply.

Policy Catalysts

Introduction of Single Window Clearance system to facilitate fast track environment and land clearances.

100 percent FDI allowed in commercial coal mining.

Modifications to the Mines and Minerals (Development and Regulation) Act to ease regulatory barriers.

Adoption of the Mine Developer and Operator (MDO) model to accelerate production timelines.

Demand Dynamics

India's total coal consumption has gone up from 922.2 million tonnes in FY21 to 1,270 million tonnes in FY25.

The power sector accounted for 82 percent of coal dispatches in FY25, reflecting rising power needs in industries and rural areas.

Domestic coal proportion of total consumption rose from 77.7 percent in FY21 to 82.5 percent in FY25.

Operational Insights

184 coal mines were allocated until January 2025, of which 65 were already in operation.

These producing mines produced 136.6 million tonnes in FY25, 34 percent higher than the previous year.

Coal prices have declined steadily due to increasing supply and government policies favoring, lowering energy bills for industries.

Strategic Outlook India's coal sector is likely to provide 83 percent of Indian requirement through local production by FY26.

The government is also promoting cleaner coal usage like washed coal utilization and carbon capture pilots.

While adoption of renewable energy is increasing continuously, coal remains the pivot of India's short-term energy security policy.

Sources: Nagaland Post, BusinessWorld, Textile Value Chain, The Hindu BusinessLine, The Hans India, CareEdge Ratings Report