The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a landmark coal sector reform titled CoalSETU (Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation). This new policy allows domestic coal linkage holders in the non-regulated sector (NRS) to export up to 50 percent of their allocated coal capacity. The initiative aims to broaden the market for Indian coal following record production levels that crossed one billion tonnes in FY24.
Under the new rules, the government has removed end-use restrictions, allowing domestic buyers to flexibly utilize coal among group companies or sell it to other players. Information and Broadcasting Minister Ashwini Vaishnaw clarified that while any domestic buyer can participate in these auctions regardless of end-use, coking coal will be excluded from this window to protect domestic steel plant supplies. The policy also allows for long-term fuel supply agreements of up to 15 years.
This strategic shift positions India to become a coal exporter, with an initial focus on neighboring markets like Nepal, Bangladesh, and Bhutan, which have immediate coal requirements. Experts suggest that leveraging India’s abundant reserves for export will help balance trade, especially since the country still heavily relies on imports for coking coal. The move is expected to improve the “Speed of Business” and reduce overall dependence on imported energy sources.