Union Cabinet allows for exporting coal up to 50% of received allocation

Paving the path for further export of coal, the Union Cabinet announced it has approved a policy that allows coal acquired through auctioning to be utilised for any industrial use and export. For perspective, the current policy allows it to be utilised only for cement, steel, sponge, iron, and aluminium, etc. through auctions.

Effectively, the Policy for Auction of Coal Linkage for Seamless, Efficient and Transparent Utilisation of coal (CoalSETU) would now allow guaranteed supply deals (coal linkages) obtained through auctions to be utilised for own consumption, export, or any other purpose (including coal washing), except for resale in the country. Those securing coal linkages would be allowed to utilise coal obtained through the window amongst its subsidiaries or group companies.

India’s coal production has been on a rising trajectory. In FY 2024-25, India produced 1.05 billion tonnes of coal and is expected to scale an annual production of 1.5 billion tonnes by 2029-30 at an annual increase of 6-7% in the coming years. Further, whilst announcing the policy, Union Minister Ashwini Vaishnaw informed that coal stocks at power plants are at a “record high”.

Imperative to note, the policy caps that only 50% of the quantity with the coal linkage holder can be exported. The policy bars traders from participating in the auctions to avert “market distortion”.

Additionally, coking coal would not be offered under the window considering the availability of metallurgical coal being domestically limited.

The Coal Ministry held that the policy would be particularly beneficial for washed coal, whose demand would “increase in the future”. It observed that coal linkage to washery operators would result in “increased availability of washed coal in the country and consequently reduce imports”.

Separately, responding to queries from the press about the destinations India may be looking at for export, Union Minister Ashwini Vaishnaw indicated countries as Nepal, Bhutan, and Bangladesh hold “immediate requirement” whilst there are other countries in India’s neighbourhood where Indian coal can mitigate demand.

Additionally, the Ministry observed, “Washed coal will also find takers outside the country, and therefore, the washed coal may also be used for the purpose of export.”