The divestment of the stake is expected to raise more than Rs170bn ($3.11bn) for the government, which currently holds a 90% share in the coal company.
The remaining 10% stake is owned by the public.
The 10% stake sale is expected to be divided into Offer for Sale (OFS) and buyback, with the Department of Disinvestment (DoD) soon to decide the mode of the share sale.
An official told Press Trust of India that the decision concerning the mode of disinvestment has not yet been agreed.
IMG, led by the Disinvestment Secretary Ravi Mathur, is guiding the course of the government's share sale in CIL.
The panel also comprises members from Ministry of Coal, Departments of Legal Affairs, Corporate Affairs, Economic Affairs and the chairman and managing director of Coal India.
The DoD is expected to invite bids from merchant bankers and legal advisers to manage the CIL share sale.
The divestment of CIL, a cash rich company with a balance of Rs600bn ($11bn), will be the biggest for the Indian Government in fiscal 2013-14. The government aims to raise Rs400bn ($7.33bn) by stake sale in various state firms this year.
CIL is responsible for nearly 85% of coal production in the country and is considered to be the largest company in the world in terms of coal production.
Image: Coal India is responsible for nearly 85% of coal production in India. Photo: John Nyberg.