India's cabinet approved a policy on December 12, 2025, allowing the export of coal due to surplus stocks at power plants, as announced by Information Minister Ashwini Vaishnaw.

Under the new guidelines, power plants with assured coal supplies can export up to 50% of their allocated quantities. They are also permitted to share coal flexibly among group companies.

As the world's second-largest coal producer after China, India has been reforming its coal sector by encouraging private participation and commercial mining. These efforts aim to address growing energy needs and decrease reliance on imports.

The decision to permit exports follows a period where coal-based electricity generation, which normally contributes around 75% of the nation's power output, declined year-on-year in seven of the first 11 months of 2025 - the highest number of such declines since 2020.

This policy is expected to support Coal India Limited, the primary producer responsible for approximately three-quarters of domestic output. India ranks as the second-largest coal consumer globally, following China.

According to a recent report by iEnergy Natural Resources, power plants maintain adequate inventory levels thanks to robust domestic production and moderated growth in electricity demand.

Additionally, the cabinet endorsed auctions for coal intended for various industrial applications. This framework enables domestic purchasers to obtain long-term supplies via auctions, free from specific end-use limitations, with the exception of coking coal, which is excluded from this arrangement.

Traders are not allowed to bid in these auctions, as stated by the government.

The initiatives are designed to promote efficient use of coal reserves, streamline procedures, and further reduce dependence on imported coal, according to an official government release.

by Reuters