Decline in Coal Imports

Why in news

The article highlights a significant decline in coal imports by thermal power plants in India for the fiscal year 2025-26 compared to the previous year, and also notes a decline in imports for plants designed on imported coal in April 2026 versus April 2025. It attributes this reduction to government measures aimed at decreasing import dependency.

Exam relevance

GS3 · Economy, Governance · Prelims · Mains

Key facts

1. Coal imported by thermal power plants in FY 2025-26 was 45.4 Million Tonnes (MT), a 27.4% decrease from 62.5 MT in FY 2024-25.
2. Coal imported by plants designed on imported coal in April 2026 was 2.88 MT, a 27.45% decrease from 3.97 MT in April 2025.
3. Government increased Annual Contracted Quantity (ACQ) up to 100% of normative requirement for non-coastal and coastal power plants.
4. Coal companies will make available coal to meet the full Power Purchase Agreement (PPA) requirement of existing linkage holders in the Power Sector.
5. Imported Coal Based (ICB) Plants are allowed to secure coal under the Revised SHAKTI Policy, 2025.

Prelims pointers

• Coal imports by thermal power plants decreased by approximately 27.4% in FY 2025-26.
• Imports by Imported Coal Based (ICB) plants also saw a decline of around 27.45% in April 2026 compared to April 2025.
• The Annual Contracted Quantity (ACQ) for power plants has been increased.
• Government decisions ensure full Power Purchase Agreement (PPA) requirement is met by domestic coal companies.
• The Revised SHAKTI Policy, 2025, allows ICB plants to procure coal.

Mains practice question

Analyze the key government initiatives aimed at reducing India's dependence on imported coal for the power sector and discuss their implications for energy security and economic stability.

Static linkage

The Indian power sector relies on coal for a significant portion of its energy generation. Historically, domestic coal production has not always met the demand, leading to imports. Government policies like the SHAKTI policy aim to streamline coal allocation and improve domestic supply to reduce reliance on imported coal, thereby enhancing energy security and managing foreign exchange outgo.

Significance

The decline in coal imports signifies a step towards greater energy self-sufficiency for India's power sector. Reduced import dependency can lead to improved foreign exchange reserves, a more stable domestic energy market, and potentially lower power generation costs if domestic production is more economical. It also reflects the effectiveness of government policies in boosting domestic coal supply and optimizing its distribution to power plants.