India’s Coal Market Structure: A Critical Analysis, by Kartikeya Hundet, at Lexcliq


India’s coal sector is primarily government owned and coordinated. Coal production in India has been controlled by the central government since the nationalisation of India’s coal mines in the early 1970s. State governments approve mining licences and leases. The complex institutional interactions make streamlining and reforming the approvals process challenging.

Key government agencies include:

  •       The Ministry of Coal: This ministry is responsible for the formulation of policies and strategies for coal exploration, project approvals and other issues relating to the production, supply, distribution and pricing of coal in India[1]. The Ministry of Coal also sets production targets and other performance indicators for Coal India through a Memorandum of Understanding (MoU).
  •       The Coal Controller: A subordinate office of the Ministry of Coal which sets standards and procedures for assessing coal quality, inspects coal quality, performs an arbitrator role in the event of quality disputes, issues project approvals, collects excise duties and manages coal-related statistics[2]
  •       State governments: Approve mining licences and leases, which are required before the Ministry of Coal grants final project approval and sets royalty rates.

Coal production in India is dominated by Coal India Limited, with smaller producers are also presented. Key producers are:

  •   Coal India Limited (Coal India): Formed as a holding company in 1975, incorporating the state-owned companies that were created following the nationalisation of India’s coal assets. The government owns a 75 per cent stake in Coal India, which continues to dominate coal production in India, accounting for over 80 per cent of India’s total coal production. Furthermore, the Coal India supplies to power plants, around 80% is through long term fuel supply agreements (FSAs), and the rest is through e-auctions. FSA prices are generally much lower than those obtained through e-auctions[3].
  •   Singareni Collieries Company Limited (SCCL): It accounts for around 10 per cent of India’s coal production, which is primarily supplied to the southern states of the country. The central government has a 49 per cent interest in SSCL, with the state government of Andhra Pradesh owning the other 51 per cent interest.
  •   Captive producers: Account for around 8 per cent of Indian production. The government allows privately-owned end-users, such as electricity generators and industrial sectors like cement production to produce their own coal, through the auction of coal blocks. The producers are referred to as ‘captive’, as the coal can only be used in approved activities, and cannot be traded or exported, although any surplus production can be sold to Coal India. Recent reforms have sought to relax these restrictions in the regulation of coal export.

Currently, the government of India enjoys a monopoly by Coal India Limited (CIL) in producing coal with over 80% of the production coming from government-controlled mines. The policy for captive mining was introduced in 1993. This opened the coal sector to private investment, although no promising progress has been made in the captive coal blocks allotted by the government. Out of the 200 allocated blocks, only 30 mines have commenced production due to various reasons. The combined production from these merely achieved the domestic demand by the power generating company as a fuel in the thermal power plant. There are certain issues that create problems in the coal production in India such as, availability of geological data, land acquisition and R&R, environment clearances, mining lease, etc. are the primary reasons behind the dismal production. Currently, a coal block auction is proposed and a detailed mechanism is being formulated for transparency and efficient processing.


[1] Government of India, Ministry of Coal (2014) Functions and responsibilities,

[2] Coal Controller (2015) Functions and responsibilities, Government of India,

[3] IEA (2018) Coal 2018: Analysis and forecasts to 2023, International Energy Agency, Paris

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