India’s Ministry of Coal has introduced a series of incentives to promote underground coal mining aimed at modernising the coal ecosystem and promoting sustainable development of the coal sector.
The new policy measures aim to address the challenges of high capital investment and longer gestation periods in underground coal mining.
The ministry has announced a reduction in the floor revenue share from 4% to 2%, providing substantial fiscal relief and improving the financial viability of underground coal projects.
Furthermore, the upfront payment requirement for such projects has been waived, removing a major financial obstacle and encouraging private sector participation.
These incentives are complemented by an existing 50% rebate on performance security for underground coal blocks, collectively lowering the entry threshold and smoothing the path for project implementation.
The Ministry of Coal said in a statement: “The Ministry’s reform-oriented approach underscores its commitment to fostering a future-ready, investment-friendly and innovation-driven coal sector.
“By incentivising underground mining, the Government is not only catalysing economic growth but also driving the industry toward greater efficiency, safety and employment generation. Underground coal mining is inherently more environment-friendly, as it causes significantly less surface disruption compared to opencast operations.
“These policy measures are expected to encourage the adoption of advanced technologies – such as continuous miners, longwall systems, remote sensing tools and AI-based safety mechanisms – which will boost productivity while ensuring ecological balance.”
The incentives signify a strategic shift towards cleaner and more sustainable coal extraction practices.
They are set to unlock the potential of underground mining in India, fostering innovation, reducing carbon emissions, and supporting the nation's energy security and self-reliance goals.
In a related development, Indian mining company NMDC is reportedly exploring coking coal assets in Indonesia and Australia, according to a report by Reuters.
Chairman Amitava Mukherjee stated that explorations are at various negotiation stages.
India, the world's second-largest producer of crude steel, imports 85% of its coking coal, with Australia being the largest supplier.
Earlier this month, India introduced a temporary 12% safeguard duty on certain steel imports to curb the influx of cheap steel, primarily from China.
The tariff, effective for a period of 200 days, was announced by the Ministry of Finance, with the possibility of revocation, amendment or extension.
