India Bars Thermal Coal Imports To Boost Domestic Supply
In a strategic pivot affecting India’s energy and industrial landscape, the government has outlined plans to slash thermal coal imports by at least 30 per cent this year, signalling a renewed emphasis on domestic fuel utilisation even as electricity demand continues to rise. The move, aimed primarily at the nation’s power sector, could reduce imports by an estimated 15 million tonnes, reflecting broader efforts to strengthen energy security, support local mining output and lower foreign dependency.
India’s reliance on imported thermal coal remains significant in certain parts of the electricity system, especially for plants designed to burn higher-calorific seaborne coal from Indonesia, South Africa and Russia. In 2025, thermal coal imports for power generation reached nearly 50 million tonnes, underlining how supply diversity has historically supported grid reliability.Under the latest plan, authorities are encouraging power producers to blend imported coal with domestically sourced fuel, with targets to replace at least 20 per cent and potentially up to 30 per cent of imported volumes at individual plants. Officials familiar with the strategy say this approach is designed to leverage record domestic production and inventory buffers, while smoothing operational transitions at facilities built around higher-grade seaborne coal.
State-run Coal India Limited has significantly boosted coal output in recent years, yielding record production figures and balancing sizable stockpiles that could lessen reliance on overseas supply. But the government’s directive comes with caution: power plants may need to recalibrate boilers and fuel-handling systems to cope with lower-grade local coal — a process that can prove costly and technically demanding without supportive policy incentives.For India’s urban development and infrastructure sectors — from residential construction to industrial estates and logistics hubs — dependable electricity supply remains a linchpin of economic activity. Thermal coal continues to underpin approximately three-quarters of the electricity mix even as renewable installations expand rapidly, ensuring grid reliability during peak demand and seasonal stress.
The import reduction plan also intersects with India’s climate commitments. As the country grows its renewable capacity — notably solar and wind — and targets carbon neutrality by 2070, reducing import dependence supports not only energy security but also lifecycle emissions management. Blended coal use paired with cleaner combustion technologies can mitigate some environmental harms while maintaining baseload stability.Yet challenges loom. Analysts warn that without adequate investment in domestic fuel quality improvements, plants may struggle to fully embrace higher proportions of local coal, potentially affecting output efficiency and maintenance costs. Aligning grid reliability with climate targets will require coordinated policy support, infrastructure upgrades and stronger supply chain integration.
For now, the plan to reduce thermal coal imports reflects a balancing act between India’s long-standing dependence on coal for power and the imperative to harness domestic resources more effectively — a transition that could reshape the country’s energy and industrial dynamics in the decade ahead.
