Coal imports into India seen rising, despite government’s attempts to bring down imports of coal: CARE Ratings

Contrary to the Centre’s plan to bring down coal imports, industries are seen to be sourcing more coal from foreign countries in FY19. Among many reasons, the unresolved issue of inadequate transport mechanism to ferry coal from the mines to the manufacturing plants is considered one of the primary cause of increase imports.

According to a note by CARE Ratings, “There is an immediate requirement to auction private coal blocks of coking and steam coal for 50 million tonnes per annum if the government wants to curb coal imports.”

“Coal import trend is expected to continue as power, cement and steel industries are expected to witness improvement in demand and capacity utilisation,” CARE Ratings said.

Though domestic coal production clocked an annual 2.5 per cent increase by producing 688.4 million tonnes in FY18, imports grew by 8.1 per cent to 213 million tonnes, on the back of sustained demand from steel sector for coking coal and steady demand from the power and cement industry, the ratings agency added.

During the last 12-months, average global coal prices have been in the range of $70-106/tonne, peaking in January, 2018.

It should be recalled that in 2014, the Supreme Court of India had cancelled 204 captive coal block licences saying these had been allocated in an illegal and arbitrary manner. While 89 of the cancelled blocks have been reallocated so far, only 28 of these are producing coal right now.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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