India is poised to set a new benchmark in coal production, aiming to reach 1.15 billion tonnes in the financial year 2025–26, according to a recent report.
Domestic coal output reached a record 1,047.6 million tonnes in FY25, marking a steady average growth rate of 10% annually over the last five years, as per data from CareEdge Ratings.
This phenomenal growth has been spurred by some major policy initiatives aimed at improving efficiency and inculcating self-sufficiency in the coal industry.
Some of the revolutionary actions initiated by the government include the Single Window Clearance system, introduction of the Mine Developer and Operator (MDO) model, allowing 100% foreign direct investment (FDI) in coal mining, and regular auctioning of coal blocks.
Apart from this, amendments to the Mines and Minerals (Development and Regulation) Act have reduced regulatory obstacles and created opportunities for more private sector participation.
The increase in coal output has been driven substantially by increasing demand from the power sector, which absorbed 82% of the coal dispatches in FY25.
India's coal usage increased enormously, from 922.2 million tonnes during FY21 to 1,270 million tonnes during FY25. This is due to the increasing energy needs of industries, households, and rural communities, the report said.
Interestingly, the proportion of domestic coal in fulfilling total consumption has also risen, from 77.7% during FY21 to 82.5% during FY25, demonstrating a shift towards higher energy self-reliance.
In January, 184 coal mines were allotted, of which 65 were in operation.
"Active mines yielded approximately 136.59 million tonnes in FY25, showing a growth of more than 34 per cent from the earlier year," said the report.
Coal India Limited (CIL) continued to lead by supplying about 74% of the overall production in FY25.
Private and captive miners also showed strong performance, supported by better logistics and technology that have increased the economic viability of mines.
Adding further to domestic supply, the government initiated the 12th round of coal block auctions in March with the offer of 28 more mines.
Coal prices have also seen a consistent downtrend, a trend that is being driven by better supply dynamics and positive policy support.
The report expects this price decline trend to continue during FY26, bringing coal closer and cheaper for industrial buyers.
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