India’s rising coal imports, increasingly a reason for the country’s wide trade and current account deficits, may be reined in considerably in the next few years, report Raj Kumar Ray and Aftab Ahmed in New Delhi. With the Cabinet Committee on Investment (CCI) approval in hand, the railways is set to complete work on three rail projects by end 2016, helping Coal India and its arms evacuate the black gold from some of their big mines and transport them to industrial hubs. The facility will help increase domestic coal output by 250 million tonnes or nearly 50%.
The three projects — Tori-Shivpur-Kathautia (Hazaribagh) triple line for the North Karanpura Coalfield in Jharkhand, Jharsuguda-Barpalli double line for Ib Valley coalfield in Orissa and Bhupdeopur-Raigur-Mand in Chhattisgarh — were stalled for nearly a decade due to various reasons. With the CCI clearance, work has begun at some of the sites, a senior official told FE.
“The clearance for these railway lines would be a milestone in terms of efforts to step up domestic production of coal. The rail connectivity has the potential to generate over 250 million tonnes of coal annually, which is almost half of what CIL produces now,” said a coal ministry official, asking not to be named.
India’s domestic coal output, mainly from Coal India, has grown slowly from 431 million tonnes (mt) in 2006-07 to 576 mt last fiscal, while imports more than trebled from 41.5 mt to 138 mt as power plants, steel and other units consumed more fuel to aid growth in Asia’s third-largest economy. Coal imports as a percentage of GDP almost doubled from 0.5% in 2006-07 to 0.9% in 2012-13, and was one of the main reasons along with oil and gold imports for widening the current account deficit.
While many captive coal blocks allotted to private players failed to take off, the pressure has mounted on Coal India to raise output. CIL has often blamed delays in green clearances, land acquisition and lack of rail links from pithead to industrial units as major reason for not being able to scale up its operations.
In this context, the