Coal Imports for India’s thermal power plants declined significantly during FY 2025-26 as the government continued efforts to increase domestic coal availability and reduce dependence on overseas supplies. According to information shared by the Ministry of Coal, thermal power plants imported 45.4 Million Tonnes (MT) of coal in FY 2025-26 compared with 62.5 MT in FY 2024-25, marking a decline of around 27.4%. The government also reported that coal imports by plants specifically designed to operate on imported coal fell to 2.88 MT in April 2026, compared with 3.97 MT in April 2025, registering a decline of around 27.45%.
Government Measures Behind Coal Imports Reduction
The government said several policy measures have been introduced to reduce Coal Imports by improving the availability of domestic coal for the power sector. One of the major initiatives was increasing the Annual Contracted Quantity (ACQ) to 100% of the normative requirement in cases where the ACQ had earlier been reduced to 90% for non-coastal power plants or 70% for coastal power plants. The increase is expected to ensure higher domestic coal supplies and lower import dependence.
Another major decision taken by the government in 2022 provides that coal companies will supply coal sufficient to meet the full Power Purchase Agreement (PPA) requirement of all existing linkage holders in the power sector, irrespective of trigger levels and ACQ limits. According to the government, this decision is expected to reduce the sector’s reliance on imported coal.
The government has also allowed Imported Coal Based (ICB) Plants to procure coal under the Revised SHAKTI Policy, 2025. The ministry said coal availability under this policy will reduce the dependence of these plants on imported fuel. In addition, existing Fuel Supply Agreement (FSA) holders can obtain coal under the Revised SHAKTI Policy, 2025 after procuring 100% of their ACQ under their existing agreements. Coal supplied beyond the ACQ will help power producers meet the complete fuel requirement of their power plants.
The ministry further stated that coal linkages made available through the CoalSETU window under the Non-Regulated Sector linkage auctions are expected to improve the availability of washed coal in the country and contribute to reducing Coal Imports.
To strengthen coal transportation and improve domestic coal availability, the Ministry of Coal has launched an Integrated Coal Logistics Plan in coordination with other ministries and stakeholders. The plan includes the development of 33 critical railway projects, expansion of First Mile Connectivity (FMC) infrastructure, augmentation of rail evacuation capacity in consultation with the Ministry of Railways, and promotion of multimodal transportation through rail, coastal shipping and inland waterways.
The government said 139 FMC projects with a combined capacity of 1,319 MT are planned to be established by FY 2029-30. In addition, coal public sector undertakings are implementing eight railway projects to improve coal evacuation from coal-bearing states.
According to the current import policy, coal remains under the Open General License (OGL), allowing consumers to import coal from any source based on contractual prices after payment of applicable duties. However, the government reiterated that Imported Coal Based (ICB) Plants have now been permitted to secure domestic coal under the Revised SHAKTI Policy, 2025. The ministry stated that its focus remains on increasing domestic coal production and eliminating non-essential coal imports. It also noted that the removal of the GST compensation cess has made domestic coal more competitive compared with imported coal.
The ministry further said coal public sector undertakings continue to supply coal at affordable prices while complying with applicable regulatory provisions. Over the past eight years, the notified price of the majority of coal grades supplied by Coal India Limited (CIL) has increased by only ₹20 per tonne. In addition, CIL conducted three tranches of Short-term Auctions and one tranche of Long/Medium Term Auction under Window-II of the Revised SHAKTI Policy during 2026 up to June 2026. The ministry said sufficient quantities of coal were made available through these auctions, enabling power plants to procure coal at near zero premiums to meet their short-, medium- and long-term requirements.
