Decline in Coal Imports for Thermal Power Plants
India's thermal power plants recorded a significant reduction in coal imports during FY 2025-26, with total imports declining by 27.4% to 45.4 Million Tonnes (MT) compared to 62.5 MT in FY 2024-25. The trend continued into April 2026, where plants designed for imported coal used 2.88 MT compared to 3.97 MT in April 2025, showing a decline of 27.45%.
Government Measures to Reduce Import Dependency
The Government has implemented multiple measures to reduce reliance on imported coal for the power sector. The Annual Contracted Quantity (ACQ) has been increased to 100% of normative requirement for all power plants, reversing previous reductions to 90% for non-coastal plants and 70% for coastal plants. Since 2022, the Government has mandated that coal companies must meet the full Power Purchase Agreement (PPA) requirement of all existing linkage holders regardless of trigger levels and ACQ levels.
Under the Revised SHAKTI Policy, 2025, Imported Coal Based (ICB) Plants are now permitted to secure domestic coal, and existing Fuel Supply Agreement (FSA) holders can access additional coal after procuring 100% of their ACQ. The recently created CoalSETU window under Non-Regulated Sector linkage auctions aims to increase washed coal availability in the country.
Infrastructure and Logistics Development
The Ministry of Coal has launched an Integrated Coal Logistics Plan in coordination with relevant Ministries and stakeholders to address coal logistics chain issues. The plan includes development of 33 critical railway projects, expansion of First Mile Connectivity (FMC) infrastructure, and augmentation of rail evacuation capacity. A total of 139 FMC projects with 1319 MT capacity are planned by FY 2029-30. Additionally, coal PSUs are implementing eight railway projects to improve coal evacuation in coal-bearing states.
Pricing and Market Mechanisms
Coal remains under Open General License (OGL), allowing consumers to import coal freely from their chosen sources at contractual prices with applicable duties. The removal of GST compensation cess has made domestic coal more competitive against imported coal. Coal PSUs continue to provide coal at affordable prices, with Coal India Limited (CIL) maintaining minimal price increases—the majority of coal grades have seen only a ₹20 per tonne increase over the past eight years. CIL conducted three tranches of Short-term Auctions and one tranche of Long/Medium Term Auction under Window-II of Revised SHAKTI Policy in 2026 (through June 2026), making sufficient coal available at near-zero premiums.