The Government of India is considering allocation of around eight to ten coal blocks to state government-run public sector companies for the purpose of commercial mining.
Coal secretary Anil Swarup said that the blocks to be allocated do not have agreement with Coal India.
The government's latest decision is to ensure adequate coal supply to the small-scale plants, which have no fuel supply agreement with the company.
Speaking at an interactive session of Coal Consumers' Association of India, Swarup said that these would be distributed after examining applications submitted by a committee.
Based on this, decision would be taken on blocks allocation.
Business Standard reported Swarup saying: "The state (undertakings) is free to decide on the pricing.
"If they seek our advice over it, we (union coal ministry) will help them, otherwise they can set their own pricing."
At present, the small-scale factories as well as other sectors, such as brick-kilns and sponge iron plants purchase coal from resellers by paying higher prices as Coal India does not sell coal to them.
Swarup added that the blocks would be distributed to public sector companies that have no pressure to use the coal in their power plants, and are free to sell it to small users.
In February 2016, Indian Government announced the offering of 100 mineral blocks for exploration to private companies in an effort to raise output and reduce dependence on overseas purchases.