The latest decision by the government to allow commercial mining of coal will help India save Rs 30,000 crore. By allowing private firms to mine coal, India will boost not only its production but also save Rs 30,000 crore of imports, PTI reported citing a Crisil statement. The decision by the Cabinet Committee on Economic Affairs (CCEA) to award the coal mining rights to the highest bidder without any restrictions on end use will boost both efficiency and production, Crisil said. The import will be substituted with domestic production, Crisil added. Currently, more than 90 percent of mining in the country is done by the government.
India fulfills one fifth of its requirement annually through imports which cost it around Rs 1 lakh crore. The largest consumers of non-coking coal namely sectors such as power, cement and steel will gain the most out of the government’s decision to commercialise coal mining. India imported 150 million tonne (MT) in FY17 costing it around Rs Rs 59,000 crore. Coal-based power plants, private thermal plants and captive power plants import nearly 90 percent of the total coal in the country.
The decision to allow private companies to mine coal will provide flexibility to coal consumers mainly power, metals and cement producers, experts say. Not only this, the commercialisation of coal mining will help in attracting independent mining companies – both domestic and foreign. Even foreign investors with deep pockets and sizable capacity to spend will also participate to participate in the auction process.