Year 2025 to transform coal sector with first exchange, gasification & more

India's coal production is set to increase by 8 to 10 per cent in the coming years, driven by growing electricity demand and increased contributions from captive mines

The Indian coal sector is set for a significant transformation in 2025, with initiatives to address the growing demand for coal and sustainability of the sector. From launching the country’s first coal exchange to the promotion of coal gasification, the government aims to strike a balance between energy transition goals and economic growth.

Coal exchange for market efficiency

India is set to launch its first coal exchange in 2025. The platform will enable trading and price determination for the dry-fuel, making coal more accessible to industries as the economy grows. Final details of the exchange are currently being worked out, as reported by PTI.

Coal gasification for cleaner energy

The government is also aiming to achieve a sustainable energy future by increasing investment in coal gasification – a cleaner alternative to burning coal. Coal gasification exploits the chemical properties of coal for a variety of energy products like synthetic natural gas, methanol, ammonia for fertilisers, and petrochemicals. The process is more environmentally-friendly than burning coal. The government had earlier launched a Coal Gasification Incentive Scheme with an outlay of Rs 8,500 crore toward such projects.

Increasing domestic demand for coal

Demand for coal is expected to rise in India due to the expanding economy and high energy requirements. The PTI report quoted Rupinder Brar, additional secretary to the Ministry of Coal, saying that there is a need for fulfilling the growing demand in an environmentally-friendly manner through the production of coal. 

 

The ministry is working on balancing output with the rising demand for coal by achieving steady improvements in the production rates of both commercial and captive mines along with state-owned Coal India Ltd (CIL).

 

In fact, coal production by India recorded a significant increase in the April-November period of the current financial year, increasing by 6.21 per cent to 628.03 million tonnes (MT), from 591.32 MT recorded in the same period in the financial year 2023-24.

Thermal & coking coal production to rise

Deloitte India projects an 8-10 per cent increase in thermal coal production the next few years, driven by the rise in electricity consumption from retail and commercial sectors. Captive mines are also likely to contribute to this growth as their production is expected to touch 175 million tonnes.

 

India is expected to continue dominating the global coking coal demand with further expansion of its blast furnace capacity in the steel sector. Coal import in the country is also going to rise, as India’s steel production is projected to reach 152-155 million tonnes during FY25, with an increase of 6 per cent as compared to the previous year.

 

Improving coal sector policies

To facilitate the growth potential, the government has made several policy changes. The old policy on mine allocation that existed before 2014 has been scrapped. Coal blocks are now allotted only when there is an assurance that they will be mined. The government is offering incentives for early production and penalties for delays to encourage swift operationalisation of new coal mines.