India Coal Industry

June 29, 2010Coal Industryby EconomyWatch


The Indian coal industry is the world’s third largest in terms of production and fourth largest in terms of reserves. Around 70% of the total production is used for electricity generation and the remaining by the steel, cement and other heavy industries. Coal is also used as fuel for domestic purposes.

India Coal Industry: History

The first coal mining operation commenced in 1774 in the Raniganj coalfield on the banks of River Damodar. The introduction of steam locomotives and WW-I stimulated demand for coal, and production peaked at 18 million tons (mts) during the 1920s.

Till independence, the Indian coal industry witnessed sporadic phases of growth. Since the private sector followed unscientific methods, productivity was low. The Indian government took steps to correct this and improve the working conditions in the nation’s coal industry. National Coal Development Corporation (NCDC), comprising of railway owned collieries, was established. In the early 1970s, all privately owned coal producing companies were nationalized under the Coal Mines (Nationalisation) Act.

India Coal Industry: Issues

Despite having one of the largest reserves, the Indian coal industry does not hold a position in the league of global energy suppliers. This can be attributed to the soaring domestic demand. A study conducted by the Indian Planning Commission and the Coal Ministry revealed that India’s total coal consumption was expected to increase from 510 mts in 2007-08 to 550 mts by 2008-09. To meet this requirement, substantial public investment is needed. Even the private players would need to deploy advanced mechanisms to increase production levels.

Coal washeries are also under pressure. The onus of producing quality coal lies with this segment. It is required to sustain high quality levels within stringent environment regulations.

Excessive government regulation continues to be a major concern for the Indian coal industry. The existing legislative framework restricts the private sector in the establishment of coal washeries and regulated mining for specific industries, such as power and fertilizer units.

India Coal Industry: Major Players

The leading players of the Indian coal industry include:

  • Coal India Limited: A public sector undertaking with 390 mines, it controls 88% of the domestic coal production.
  • Singerani Collieries Company: It operates through a network of 50 mines.
  • Minerals and Metals Trading Corp: It is responsible for the conversion of imported coal into coke for metallurgical and industrial purposes.
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