Coal Policy for Export and Industrial Use

The Union Cabinet has approved a new policy permitting coal acquired through auctions to be used for any industrial purpose and export. Previously, coal was limited to specific industries like cement, steel, sponge iron, and aluminium.

Policy Highlights

• The new policy, CoalSETU, facilitates seamless, efficient, and transparent utilisation of coal linkages obtained through auctions.
• Allows coal to be used for own consumption, export, or any other purpose (including coal washing), except for resale in India.
• Coal linkages can be used among subsidiaries or group companies.
• 50% of the coal quantity held by linkage holders can be exported; traders are barred from participating in auctions to prevent market distortion.
• Coking coal is excluded as it is limited domestically.

Production and Demand

• India's coal production hit 1.05 billion tonnes in FY 2024-25 and is projected to reach 1.5 billion tonnes by 2029-30, with a growth rate of 6-7% annually.
• Coal stocks at power plants are reportedly at a record high according to Union Minister Ashwini Vaishnaw.

Implications for Washed Coal

• The policy is expected to boost demand for washed coal.
• Providing coal linkage to washery operators will increase the availability of washed coal in the country, reducing the need for imports.

Export Opportunities

• Immediate export destinations identified include Nepal, Bhutan, and Bangladesh.
• Washed coal is anticipated to have a broader international market.