India Poised for Record 1.15 Billion Tonnes Coal Output in FY26

08 Jul 2025 CW Team

This surge has been fuelled by a series of government policy reforms aimed at improving coal mining efficiency and fostering self-reliance. Notable initiatives include the Single Window Clearance system, the Mine Developer and Operator (MDO) model, allowance of 100 per cent foreign direct investment in coal mining, and regular coal block auctions. Amendments to the Mines and Minerals (Development and Regulation) Act have also helped remove regulatory hurdles and attract private sector participation.

The increase in coal production aligns with rising demand from the power sector, which accounted for 82 per cent of total coal dispatches in FY25. Overall coal consumption rose from 922.2 million tonnes in FY21 to 1,270 million tonnes in FY25, driven by growing electricity needs across industries, households and rural areas. The share of domestic coal in total consumption increased from 77.7 per cent in FY21 to 82.5 per cent in FY25.

Supporting this shift, 184 coal mines had been allocated by January 2025, with 65 blocks already operational. These active mines produced around 136.59 million tonnes in FY25, marking over 34 per cent growth compared to the previous year.

Coal India Limited (CIL), the largest producer, contributed approximately 74 per cent of total output in FY25. Private and captive miners have also performed strongly, aided by improved logistics and technology enhancing coal block viability. The 12th round of coal block auctions in March 2025 offered 28 additional mines to boost domestic supply further.

Meanwhile, coal prices have steadily declined due to improved supply conditions and supportive government policies. This downward trend is expected to continue in FY26, making coal more affordable for industrial consumers, the report noted.

India is on course to achieve a record coal production of 1.15 billion tonnes in the financial year 2025-26, according to a recent report by CareEdge Ratings. Domestic coal output reached an all-time high of 1,047.6 million tonnes in FY25, growing at an average annual rate of 10 per cent over the past five years.This surge has been fuelled by a series of government policy reforms aimed at improving coal mining efficiency and fostering self-reliance. Notable initiatives include the Single Window Clearance system, the Mine Developer and Operator (MDO) model, allowance of 100 per cent foreign direct investment in coal mining, and regular coal block auctions. Amendments to the Mines and Minerals (Development and Regulation) Act have also helped remove regulatory hurdles and attract private sector participation.The increase in coal production aligns with rising demand from the power sector, which accounted for 82 per cent of total coal dispatches in FY25. Overall coal consumption rose from 922.2 million tonnes in FY21 to 1,270 million tonnes in FY25, driven by growing electricity needs across industries, households and rural areas. The share of domestic coal in total consumption increased from 77.7 per cent in FY21 to 82.5 per cent in FY25.Supporting this shift, 184 coal mines had been allocated by January 2025, with 65 blocks already operational. These active mines produced around 136.59 million tonnes in FY25, marking over 34 per cent growth compared to the previous year.Coal India Limited (CIL), the largest producer, contributed approximately 74 per cent of total output in FY25. Private and captive miners have also performed strongly, aided by improved logistics and technology enhancing coal block viability. The 12th round of coal block auctions in March 2025 offered 28 additional mines to boost domestic supply further.Meanwhile, coal prices have steadily declined due to improved supply conditions and supportive government policies. This downward trend is expected to continue in FY26, making coal more affordable for industrial consumers, the report noted.

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