[29 March 2024] The Hindu Op-ed: Understanding India’s coal imports

PYQ Relevance:


Q) “Despite the adverse environmental impact, coal mining is still inevitable for Development”. Discuss. (UPSC CSE 2017) 

Q) What are the consequences of Illegal mining? Discuss the Ministry of Environment and Forest’s concept of GO AND NO GO zones for the coal mining sector. (UPSC CSE 2013) 


Q) Despite having large reserves of coal, why does India import millions of tonnes of coal?
1. It is the policy of India to save its coal reserves for the future and import it from other countries for the present use.
2. Most of the power plants in India are coal-based and they are not able to get sufficient supplies of coal from within the country.
3. Steel companies need large quantities of coking coal which has to be imported.

Which of the statements given above is/are correct? (UPSC CSE 2012) 
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3


Prelims: International Organisations;

Mains: International Organisations; Trades and Practices;

Mentor comments: The spectre of electricity shortages rises again as hot weather descends across the country. In recent years, increasingly unpredictable weather patterns and a fast-growing economy have led to big increases in electricity demand, the meeting of which reliably becomes a challenge. But some of the discourse in this context deserves greater scrutiny.

Let’s learn. 

Why in the News?

The recent unpredictable Weather Discourse and increase in Energy Demands around the coal sector in India needs a course correction.

What are the recent challenges highlighted with coal?

  • Challenge with Logistics:
    • Shortage of Domestic Thermal Coal: It is the kind of Coal used in electricity generation, which is primarily blamed for the electricity shortage. Electricity shortage last year was about 840 million units due to poor monsoon, in turn leading to increased demand and reduced supply from some sources. 
    • Shortage of Logistics: According to the Ministry of Power advisory, the core challenge is insufficient logistics to move the coal to power plants. This leads to the second conflation, that the only alternative source is imports. 
  • The issue of imports:
    • Some thermal coal imports to blend with domestic coal may be required even if auctions are used. The question then is about how much of imports for which coal plants. 
    • India has been the major demand side driver of the global coal market. The higher imports is an indication of the preparations to meet the rise in demand of power. 
    • A mandatory blending of 6% imported coal, instead of the current blending levels, can increase the variable cost of coal-based electricity by 4.5%-7.5%. 
    • Indeed, as in the report on Annual Rating of Power Distribution Utilities, power purchase costs increased by 15% in FY23 due to increases in demand, coal imports, and prices of imported coal. 
  • The Issue with Generation and Location:
    • The plants that generate the most (pit-head plants) are situated close to mines, far away from ports, and do not face coal shortages. Shortages in periods of high demand are more likely in plants far away from mines which typically do not generate as much. 

Way Forward:

  • Reducing Coal dependency: The discourse around coal shortages in the country needs course correction. It cannot be assumed that coal imports are the default way to address shortages. 
  • Increasing Accessibility: The fundamental challenge is to overcome the logistics bottlenecks that are preventing coal from reaching the locations where required. 
  • Government Interventions needed: In the interim, regulatory commissions and distribution utilities must ensure that all coal-based plants are alert to the possibility of coal shortages and identify the cheapest alternative sources which may not be imports to bridge the gap. 


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