In a bold move to enhance underground coal mining, the Indian government has unveiled new incentives aimed at attracting investors to this crucial sector. By eliminating the upfront payment requirement and slashing the revenue share from 4% to 2%, the government is paving the way for a more sustainable and modern coal ecosystem. With domestic coal production surpassing 1 billion tonnes in FY25, this initiative seeks to address the challenges faced by underground mining, which currently accounts for just 4% of total coal output.

Revitalizing the Coal Sector

The Ministry of Coal has announced a suite of strategic policy reforms designed to breathe new life into India’s coal industry. These changes are particularly focused on overcoming the high capital costs and lengthy timelines that have traditionally hindered underground mining projects. This initiative highlights the government’s commitment to sustainable development in the energy sector.

• Key Policy Changes:
  • Reduction in Revenue Share: The revenue share for underground mines has been halved to 2%, providing significant financial relief.
  • Waived Upfront Payments: Investors can now participate in underground mining without the burden of mandatory upfront payments.
  • Performance Security Rebate: A 50% rebate on performance security for coal blocks further reduces the barriers to entry.

Encouraging Private Sector Involvement

These incentives are designed to attract greater private sector participation, which is essential for faster project implementation. By lowering the financial thresholds, the government hopes to spur investment in underground mining operations.

“By incentivizing underground mining, the government is not only catalyzing economic growth but also driving the industry toward greater efficiency, safety, and employment generation,” a government spokesperson stated.

Environmental Benefits of Underground Mining

One of the notable advantages of underground mining is its reduced environmental impact. Unlike opencast operations, underground mining causes significantly less disruption to the surface, making it a more eco-friendly option. The government’s push for advanced technologies such as AI-driven safety systems and remote sensing tools aims to enhance productivity while maintaining ecological balance.

Future Projections for Coal Production

With the recent reforms, the government aims to decrease reliance on coal imports by boosting domestic production. Since the introduction of commercial coal mining auctions in 2020, India’s coal output has seen a remarkable increase. Preliminary data indicates that coal production reached 1.05 billion tonnes in FY25, up nearly 5% from the previous fiscal year, with commercial and captive mines contributing a significant 28% increase.

Looking ahead, the government projects coal production to rise to 1.13 billion tonnes in FY26, marking a continued upward trajectory for the sector.

Conclusion

The government’s latest initiatives are poised to transform the underground coal mining landscape in India, potentially unlocking tremendous economic benefits while promoting environmentally conscious practices. As the sector evolves, the integration of innovative technologies and increased private investment could lead to a more robust and sustainable coal industry.