India’s appetite for Russian thermal coal surged to a two-year high in May 2025, marking a sharp 52 percent month-on-month jump and signaling a strategic pivot in sourcing amid evolving global energy dynamics. This spike, the highest since June 2023, comes despite India’s broader push for energy self-reliance and rising domestic coal output. Analysts attribute the surge to a mix of competitive pricing, higher-grade fuel, and seasonal demand shifts.
Here’s a detailed look at what’s driving this trend and what it means for India’s energy landscape.
Key Trends And Market Signals
- India imported 1.3 million metric tonnes of Russian thermal coal in May 2025, a 52 percent rise from April
- This is the first time in nearly two years that Russian coal shipments to India crossed the 1-million-tonne mark
- Russia accounted for 7.5 percent of India’s total thermal coal imports in May
- India’s overall thermal coal imports rose 10 percent month-on-month to 17.4 million tonnes, the highest since June 2024
- Indonesia remained India’s top supplier with 9.8 million tonnes, up 16 percent from April
Why Russian Coal Is Back In Demand
Several factors contributed to the renewed interest in Russian coal:
- Russian exporters offered flexible pricing and higher-calorific-value coal, making it more attractive than lower-grade Indonesian alternatives
- Indian buyers, especially in the power and cement sectors, favored Russian coal for its consistent quality and combustion efficiency
- The early onset of the monsoon season in India reduced hydropower output, increasing reliance on thermal generation
- Ongoing geopolitical tensions in the Gulf region and a stronger rouble added urgency to secure stable, high-grade supplies
Domestic Push Versus Import Reality
Despite the import spike, India continues to emphasize domestic coal production:
- India’s coal imports fell 7.9 percent in FY25 to 243.62 million tonnes, saving nearly 8 billion dollars in foreign exchange
- Thermal power plants reduced blending-related imports by over 41 percent, reflecting a shift toward local sourcing
- Coal India Ltd aims to boost output to 875 million tonnes in FY26, reinforcing the government’s energy independence agenda
However, experts note that high-grade thermal and coking coal imports will remain essential for sectors requiring specific fuel characteristics.
What Lies Ahead
- Russian coal’s long-term market share in India is expected to remain limited due to high logistics costs and rising domestic supply
- Future demand will hinge on global price trends, weather patterns, and geopolitical developments
- Indian buyers may continue to diversify sources, balancing cost, quality, and supply security
While the May surge may not signal a permanent shift, it underscores India’s pragmatic approach to energy sourcing—where flexibility, quality, and timing often outweigh long-term allegiance.
Sources: Kommersant, The Hans India, Times of India, MSN India, Rediff Money, PTI, BigMint, National Credit Ratings (NCR)
