India’s Coal Sector

India’s Coal Sector

Coal, a conventional energy resource, is naturally occurring and was formed through compaction and sedimentation during the Carboniferous period approximately 300 million years ago.

It stands as India's most crucial and abundant fossil fuel, satisfying 55 percent of the nation's energy needs. These hard coal deposits are distributed across 27 major coalfields, predominantly in the eastern and south-central regions of the country. Additionally, India boasts significant lignite reserves estimated at around 36 billion tonnes, with Tamil Nadu, the southernmost state, hosting approximately 90 percent of these reserves.

About Coal


  • Coal formation begins with the decay of dead plant matter into peat, a precursor to coal.
  • Over millions of years, heat and pressure from deep burial transform peat into coal.
  • Around 300 million years ago, during the Carboniferous period, swampy forests covered the Earth, leading to the formation of coal.
  • Accumulation of dead plants in swamp waters, followed by shifting of the Earth's surface, halted the decay process and separated plant layers.
  • Compaction of lower layers by weight, water, and dirt, along with heat and pressure, caused chemical changes, expelling oxygen and leaving carbon-rich deposits.
  • Eventually, the compacted plant matter turned into coal through chemical and physical transformations over millions of years.

Types of Coal


  • Carbon content: 80 to 95 percent.
  • Characteristics: Very low volatile matter and negligible moisture content.
  • Appearance: Tough, compact, jet black coal with a semi-metallic luster.
  • Value: Most valuable with the highest heating value among coal varieties.
  • Availability: Found in small quantities, primarily in Jammu and Kashmir (in Kalakot).


  • Carbon content: 60 to 80 percent.
  • Characteristics: Wide range of carbon content and moisture content.
  • Appearance: Dense, compact, and usually black.
  • Utility: Used for steam generation, heating, coke production, and gas production due to its high quality.
  • Production: Predominantly produced in states like Jharkhand, Orissa, West Bengal, Chhattisgarh, and Madhya Pradesh.


  • Carbon content: 40 to 55 percent.
  • Characteristics: Lower-grade coal and the first stage in the transformation of woody matter into coal.
  • Appearance: Ranges in color from dark to black-brown.
  • Challenges: High moisture content (over 35%) results in significant smoke but less heat.
  • Locations: Found in regions such as Rajasthan's Palna, Tamil Nadu's Neyveli, Assam's Lakhimpur, and Jammu and Kashmir's Karewa.


  • Carbon content: Less than 40 to 55 percent.
  • Characteristics: Contains high volatile matter and moisture content.
  • Utility: Rarely compact enough to serve as fuel without compression into bricks.
  • Behavior: Behaves like wood, emitting less heat, producing more smoke, and generating a lot of ash when burnt.

India's Coal Sector: A Vital Component of Energy Security

  • Historical Significance: India's industrial evolution has been closely intertwined with its domestic coal reserves, serving as the backbone of its economic growth and development.
  • Rapid Increase in Energy Consumption: Over the past four decades, India has witnessed a remarkable surge in commercial primary energy consumption, experiencing an approximate 700 percent increase. This surge underscores the pivotal role of coal in meeting the nation's energy demands.
  • Per Capita Energy Consumption: Despite the significant growth in energy consumption, India's current commercial primary energy consumption per capita stands at approximately 350 kg/year. This figure is notably lower compared to that of developed nations, highlighting both the scope for further energy consumption growth and the need for sustainable energy strategies.
  • Future Energy Demand: With a burgeoning population, expanding economy, and aspirations for an improved quality of life, India's energy consumption is poised to escalate further in the coming years. This trajectory underscores the criticality of securing reliable energy sources to sustain economic progress and societal development.
  • Continued Relevance of Coal: Despite advancements in renewable energy technologies, coal remains indispensable to India's energy landscape. Limited reserve potentiality of petroleum and natural gas, environmental constraints on hydel projects, and geopolitical considerations regarding nuclear power underscore the enduring significance of coal in meeting the nation's energy needs.

Coal Production in India

  • Increased Production
    • In the fiscal year 2018-19, India achieved a significant milestone by increasing its all-India coal production to 730.354 million tonnes, marking a notable growth rate of 7.9%. 
    • This achievement was made possible through sustained investment programs and the adoption of modern technologies in coal mining operations.
  • Establishment of Regional Sales Offices
    • To efficiently meet the demands of various consuming sectors across different regions of the country, Coal India Limited (CIL), the world's largest coal mining company, has set up Regional Sales Offices and Sub-Sales Offices throughout India. 
    • These offices play a crucial role in ensuring the smooth distribution and supply of coal to diverse industries.

Coal Resources Classification

  • Formation and Exploration: India's coal resources are predominantly found in older Gondwana formations in the peninsular region and younger tertiary formations in the northeastern region.
  • Resource Classification: Resources are classified as 'Indicated' or 'Inferred' based on Regional/Promotional Exploration results, with boreholes typically spaced 1-2 kilometers apart. Detailed exploration upgrades resources to the more reliable 'Proved/Measured' category in selected blocks where boreholes are less than 400 meters apart.

Coal India Limited (CIL)

  • Key Player in Coal Production
    • CIL holds the distinction of being the world's largest coal mining company, contributing approximately 85% of India's domestic coal production. 
    • The significance of CIL in India's political economy cannot be understated, as coal remains a cornerstone of the nation's energy sector.
  • Government Ownership
    • The central government of India owns a substantial stake, approximately three-quarters, in CIL. 
    • The company's operations generate significant revenue for the government through dividends and taxes levied on coal-related activities, contributing to the nation's fiscal health.
  • Economic Contribution
    • CIL's operations not only provide vital tax revenue but also serve as a major source of employment, particularly in regions where coal mining activities are concentrated. 
    • The company's presence has a significant socio-economic impact on these areas, supporting livelihoods and fostering economic development.
  • Challenges in Transportation
    • The transportation of coal poses significant challenges, with Indian Railways being the primary mode of transport for domestic coal. 
    • However, the railway system often overcharges for coal transportation, impacting the overall cost structure for power plants, especially those located far from coal mines. 
    • This underscores the need for efficient and cost-effective transportation solutions in the coal sector.

Coal Reserves in India

India boasts substantial coal reserves, with geological estimates indicating a total of 319.02 billion tonnes of coal resources as of April 2018. 

These reserves are spread across 27 major coalfields, primarily located in the eastern and south-central regions of the country.

  • Lignite Reserves
    • In addition to hard coal deposits, India also possesses significant lignite reserves, estimated at around 36 billion tonnes. 
    • The majority of these reserves, approximately 90%, are concentrated in Tamil Nadu, highlighting the state's importance in India's energy landscape.
  • Regional Distribution
    • Jharkhand, Odisha, Chhattisgarh, West Bengal, and Madhya Pradesh emerge as the top five states in terms of total coal reserves. 
    • These states play a pivotal role in India's coal sector, contributing significantly to the nation's energy security and economic growth.

Categorization of Coal Resources

The distribution of coal in India is categorised into two main classifications:-

  1. Gondwana Coalfields
  2. Tertiary Coalfields

Each with distinct characteristics and geographical locations.

Gondwana Coalfields

  • Dominant Reserves: Gondwana coal, originating from formations that are approximately 250 million years old, constitutes a significant portion of India's coal reserves, amounting to 98% of the total reserves and contributing to 99% of the nation's coal production.
  • Unique Properties: This coal type is notable for its low moisture content and elevated levels of phosphorus and sulfur. It differs from Carboniferous coal, which is almost absent in India due to its much younger age.
  • Quality and Production: India's metallurgical-grade and superior-quality coal predominantly stem from Gondwana coal. Among the various coalfields within this category, the Damuda series, particularly the Lower Gondwana strata, stands out, contributing 80% to the country's total coal production.
  • Geographical Distribution: The Damuda series encompasses 80 of India's 113 coalfields, situated in valleys of rivers like Damodar, Mahanadi, Son, Godavari, Wardha, Indravati, Narmada, Koel, Panch, and Kanhan across states such as Jharkhand, West Bengal, Chhattisgarh, Odisha, Maharashtra, Andhra Pradesh, and Madhya Pradesh.
  • Composition: Gondwana coal exhibits volatile compounds and ash content, typically ranging from 13% to 30%, which prevent the carbon percentage from exceeding 55% to 60%.

Tertiary Coalfields

  • Characteristics: Tertiary coalfields, formed between 15 to 60 million years ago, possess lower carbon content compared to Gondwana coal but are characterized by higher moisture and sulfur levels.
  • Geographical Distribution: Primarily located in extra-peninsular regions, tertiary coalfields are found in states such as Assam, Meghalaya, Nagaland, Arunachal Pradesh, Jammu and Kashmir, West Bengal (Darjeeling foothills), Rajasthan, Uttar Pradesh, and Kerala.
  • Exceptions: Tamil Nadu and the union territory of Pondicherry also house tertiary coal reserves, serving as exceptions to the general distribution pattern.

Distribution of Coal in India


  • Concentration and Richness: The coalfields in Jharkhand are concentrated in a narrow belt running east-west parallel to the 24°N latitude. Notably, the Jharia coalfield is one of the oldest and richest, known for its superior metallurgical coal quality.
  • Key Reserves: Besides Jharia, the state boasts other significant reserves such as Bokaro, Girdih, and Karanpura, contributing substantially to India's coal production.


  • Reserve and Production: Despite ranking third in terms of coal reserves, Chhattisgarh stands second in coal production, trailing only behind Jharkhand. The Korba coalfield is a prominent contributor, covering a substantial area in the Korba district and adjacent valleys.
  • Additional Fields: Other coalfields like Hasdo-Arand, Chirmiri, Jhilmili, and Johila further enrich Chhattisgarh's coal portfolio.


  • Reserve and Production Dynamics: Orissa ranks as the second-largest state in coal reserves but stands third in coal production. Talcher, extending from Talcher town to Rairkhol, represents one of the significant coalfields, predominantly utilized by thermal power and fertilizer plants.
  • Geographical Spread: The coal reserves are dispersed across districts like Dhenkanal, Sambalpur, and Sundargarh, with additional reserves in Rampur-Hemgir and Ib river coalfields.

Madhya Pradesh

  • Sigrauli and Beyond: Madhya Pradesh, the fourth-largest coal-producing state, hosts the significant Singrauli coalfield in districts like Sidhi and Shahdol. This coalfield supplies coal to major thermal power plants in Singrauli and Obra.
  • Pench-Kanhan-Tawa: Another notable coalfield in Madhya Pradesh, located in Chhindwara district, contributes to the state's coal production and energy sector.

Andhra Pradesh & Telangana

  • Southern Contribution: Andhra Pradesh contributes nearly 10% to India's coal production, mainly from the Godavari valley region. Singareni and Kothagudem collieries, operational in these areas, supply non-coking coal, vital for the nation's energy needs.


  • Regional Impact: Despite possessing only 3% of the country's coal reserves, Maharashtra produces over 9% of India's coal, thanks to reserves in Kamptee, Wardha Valley, and other regions in Nagpur and Chandrapur districts.

West Bengal

  • Reserve vs. Production: West Bengal, holding 11% of India's coal reserves, contributes 6% to the nation's coal production. Raniganj, the state's largest coalfield, along with districts like Burdwan, Bankura, and Purulia, contributes significantly to coal output.

Import of Coal in India

    • Import Policy: Coal can be freely imported under the Open General License based on commercial prudence and needs.
  • Consumer Groups
    • Steel Industry: Steel manufacturing units like SAIL import coking coal to bridge the demand-supply gap and enhance product quality.
    • Power Plants: Non-coking coal is imported by coal-fired power plants to meet their fuel requirements.
    • Other Industries: Cement plants, captive power plants, sponge iron plants, industrial consumers, and coal traders also import non-coking coal.
    • Iron & Steel Sector: Pig-iron manufacturers and consumers in the iron & steel sector import coke for various processes, often utilizing mini-blast furnaces.

Government Initiatives

  • UTTAM Application: Launched by the Ministry of Coal, the UTTAM app aims to enhance transparency and efficiency in coal quality monitoring.
  • New Coal Linkage Policy: Approved by the CCEA, it utilizes reverse auctions to ensure timely fuel supply to power plants.
  • Online Coal Clearances System: Developed to streamline permissions, clearances, and approvals granted by the Ministry of Coal.
  • Coal Allocation Monitoring System (CAMS): Tracks transparent allocation of coal by CIL to states and consumers.
  • Commercial Coal Mining: Made available to Indian and foreign private sector companies, enhancing competition and efficiency.
  • Auction Methodology: Approved by the CCEA in February 2018 for auctioning coal mines/blocks for commodity sale.

Way Forward

  • Increased Production: Leveraging higher-producing mines to increase production and competition.
  • Pricing Reconsideration: Shift from coal grades based on mined quantity to grades based on desired end-use.
  • Infrastructure Development: Focus on developing offtake routes for bulk transportation and considering alternatives to delayed railway projects.
  • Risk Management: Introduce new instruments, contracting, and incentives to manage sectoral risks effectively.
  • Innovative Financing: Introduce innovative and targeted financing solutions to address challenges in the power sector.
  • Ash Content Reduction: Work towards reducing coal ash content to improve quality and environmental impact.