Imported coal has not been able to make a sizeable dent in the Indian market, thanks to high freight cost levied by Indian Railways. With freight rates as high as 250 per cent of the price of coal being transported, imported coal has only been able to capture market in coastal areas, trade sources said.
There had been great apprehension among non-coking coal manufacturers that free import of coal would hurt domestic producers. Indian Railways transports 51 per cent of mined coal, while a further 23 per cent was transported on industry-owned rail networks.
Traders said domestic producers enjoyed an edge in supply of coal in the interior and have also raised prices recently. Although the price hike was a nominal two per cent on average, another two per cent hike on account of royalty payable to Indian government had resulted in coal prices going up by around 3.5-4 per cent on average on base price of Rs 606 per tonne. Sources said there could be another round of price hikes.
Trade sources predicted that imported coal was unlikely to gain market share with its existing cost structure unless global prices crashed or were brought down.
