Why India Can’t Quit 'Sinful' Coal Imports Despite Atmanirbharta Ambitions

"If we import crude oil, I can understand. But if we are importing coal, thermal coal at that, it's a sin."

This blunt confession, reportedly voiced by Prime Minister Narendra Modi to his then Coal Minister Pralhad Joshi in 2022, captured both the ideological idealism and the policy ambition behind India’s coal strategy. It was meant to reflect national shame over a dependence that, in the Prime Minister’s view, had no justification. After all, India boasts the world's fifth-largest coal reserves.

Yet, in the financial year 2024–25, India imported 243.62 million tonnes of coal—a meagre retreat from the 265 million tonnes of the year before.

When it comes to coal, the headline goal of "atmanirbharta"—self-reliance—remains more slogan than fact, as imports still account for around one-fifth of the country’s coal appetite.

Is the dream of zero coal imports an achievable milestone, or a politically convenient mirage?

About 20 to 25 per cent of India’s total coal demand is still met through imports. At the heart of this dependence lies the inconvenient truth that not all coal is created equal.

The Coking Coal Conundrum

Coking coal is mainly used in the manufacturing of steel through the blast furnace route.

Unfortunately, India’s coking coal comes with a stubborn problem. It is high in ash content, often ranging from 18 per cent to a sooty 49 per cent, and thus is not suitable for direct use in a blast furnace.

The fix? Washing it to shed the excess ash. But domestic washing capacity has historically lagged. So even the best domestic coking coal, after cleaning, must be blended with imported coking coal, which boasts a far cleaner 9 per cent ash content. Only then does it meet the exacting standards of India’s steel giants.

To make matters worse, a large chunk of our coking coal, instead of being upgraded and used for metallurgical needs, is siphoned off to thermal power plants, where its inferior quality is tolerated rather than improved.

While coking coal accounts for about 22 per cent of total coal imports, it is the thermal variety—used to fire power stations and other industrial plants such as paper, sponge iron, and cement—that dominates the cargo ships docking at India’s ports.

What Explains the Non-Coking Coal Imports?

The power sector imports coal for imported coal-based (ICB) power plants set up in the coastal region, as they have been specially designed to use imported coal only, and for domestic coal-based (DCB) power plants for blending purposes.

Not every power plant suffers equally. India’s so-called pit-head power stations, perched right next to the mines, enjoy a steady supply of domestic coal and rarely run dry.

But for plants situated in the hinterland, the challenge is not really about the availability of domestic thermal coal per se, but of insufficient logistics to move the thermal coal from the mines to the power plants, says Ashok Sreenivas of the Prayas Group.

Fixing this logistical chokehold is no overnight task—it demands years of infrastructure upgrades and better rail connectivity. As such, when the stockpiles dwindle, importing thermal coal becomes the insurance policy of choice.

Curiously, the state-run Maharatna entity Coal India (CIL), which controls around 80 per cent of India’s coal production, auctions about 10 per cent of its production—roughly 70 to 80 million tonnes a year.

While this coal is costlier than what many plants receive through regular supply, it is still cheaper than imported coal. Yet, even plants without logistical constraints rarely consider auctions a viable alternative, says Ashok Sreenivas.

Additionally, we have 15 imported coal-based (ICB) power plants which were designed from inception to run exclusively on imported coal. These include Tata Power and Adani Power's plants at Mundra in Gujarat; Essar Power plant in Salaya; JSW Ratnagiri; Tata Trombay; Udupi Power; Meenakshi Energy; and JSW Torangallu.

Devil in the Details

At first glance, India’s dependence on coal imports seems easy enough to rationalise—traders, power producers, and industries weigh costs, shipping routes, and commercial feasibility. But behind these textbook explanations hides the true villain: inadequate availability of superior coal from indigenous sources.

To grasp this tangled reality, one must understand how India’s blending policy evolved over the years—more by necessity than design.

Back in 2009, power plants began mixing imported coal with domestic supplies to bridge the quality gap. The arrangement was never meant to become permanent, but crisis after crisis kept it alive. By 2014–15, facing an alarming domestic shortfall, the government nudged plants to import over 50 million tonnes for blending. The following year, that figure swelled to 73 million tonnes.

The numbers tell a story of chronic firefighting. In April 2022, electricity consumption jumped by 12 per cent compared to the previous year. Domestic coal supply lagged woefully behind, creating a daily gap of up to 1.6 lakh tonnes during the summer and monsoon.

Desperate to avert blackouts, the government pushed blending rates higher—up to 10 per cent in peak summer. Even when monsoon woes receded, the advisory stayed in place: 6 per cent through early 2024, then dialled down to 4 per cent until mid-October. Only after October 15, 2024—thanks to improved stockpiles and steadier domestic supply—was the import advisory finally lifted.

Yet the scale of India’s coal hunger makes clear that this reprieve is temporary. In 2023–24, total demand soared to an eye-watering 1,237.54 million tonnes—up from 1,115.04 million the year before. Domestic production too rose sharply, crossing 997.83 million tonnes with an 11.71 per cent annual leap from 893.19 MT in 2022–23.

Take next year’s figures: for 2025–26, the Ministry of Power has projected a requirement of 906.1 million tonnes for the power sector alone. The Ministry of Coal has pledged to deliver exactly that. On paper, this looks like perfect self-reliance.

But history offers a sober reminder—paper targets rarely match the messy reality of our ability to supply coal. The fallback on imports is less a policy choice and more a bitter inevitability.

Take, for instance, the oft-repeated pledge to double Coal India Ltd.’s output to a billion tonnes by 2019. In reality, the company’s annual production remained well below that mark for years, clocking in at just 774 million tonnes in FY 2023–24.

The lone bright spot came on March 20, 2025, when India finally crossed a symbolic threshold: total coal production for FY 2024–25 exceeded one billion tonnes for the first time in the nation’s history—a milestone long promised, and long overdue.

Counting the Cost

Of this, non-coking coal accounted for approximately $20 billion. Eliminating just this segment would significantly ease the current account deficit—by some estimates, by over 50 basis points.

Coal imports also expose the country to the vagaries of global commodity markets. During the 2021–22 price surge following the Ukraine crisis, international coal prices soared as much as fourfold. These external shocks placed additional pressure on the rupee and foreign exchange reserves, making energy affordability a real concern.

And the benefits don’t stop at the macro level. Domestically mined coal is far cheaper than its imported counterpart, which means lower per-unit power costs for industries and consumers alike—an undeniable boon for economic competitiveness.

All this raises an uncomfortable but necessary question for those in power: if the stakes are so high and the gains so obvious, why has successive leadership—especially this government with its towering promises—failed to deliver coal security at home? It’s a question that deserves answers, not just assurances.

The Modi government has notched up visible wins—crossing the one billion tonne production mark is certainly historic—but it has also presided over a pattern of big promises and slow delivery. Recall then-Coal Minister Piyush Goyal’s confident 2015 pledge to end coal imports by 2017, or Pralhad Joshi’s later vow to achieve self-reliance by FY25. Today, the narrative still outpaces reality by a wide margin.