THE makeover of INDIAN COAL INDUSTRY

India has went on to become the second largest coal producer in the world, still has not been able to produce enough to meet the rising demands from industries of steel mills, power plants ,cement, and fertiliser units. India has for long been depending on such coal , for being it’s source of energy. Coal  has been so important, that only nationalized government entities were permitted to participate in the coal-mining process , during the  1970s. This led to the emergence of the Coal India, which constitutes for around 80 % of the total coal production in our nation.

There  are major issues which need to be addressed now, regarding meeting the coal requirement.  Last September, when heavy rains flooded the coal mines, the production had to be stopped for some time completely. The mining license had been restricted to commercial  companies, who needed to have prior experience in bidding of coal mining units.  The coal production, only by the Government entities have failed   to produce the required quotas, as a result new reforms are in place. According to the reforms, any companies who’ve got themselves registered, can try and produce coal now on their own, without having the need of any kind of experience.

It seems that Narendra Modi is finally trying to break the 43 years old stranglehold. He started the policy of auctioning the natural resources, so that the sector is finally open for them to buy and produce. Top conglomerates had been waiting for this to happen for a very long time. This opening up of sectors will help in eradication of lot of prevailing problems like unemployment, poverty. We’ll be directly  benefit as  enhanced energy would be available, and the cost of production would come down making the coal power available at lower costs. The country would benefit , because the increase in FDI, would finally  stabilize the irregularities arising in the Coal supplies. Guatam Adani, Kumar Mangalam Birla, Sajjan Jindal were the top conglomerates waiting for these reforms  .

The government also thought this reform to be a money-making model . Initially, the entities had to pay fixed sums per tonne, what now the commercial miner shave to  pay a portion of their total profits, say 5%.In order to boost the coal production, the coal blocks would be given on a revenue –sharing basis. The commercial miners  have to promise to mine at least 50% of the production plan , and share the profits.

Another major problem is the transportation. The transportation by trains is a big concern, as rail transport is the most economical way, but it does not provide access to all the far –fetched areas. On the 3rd of July,2020  RITES have renewed their five-year long pact with Coal India, over the construction of rail infrastructure.

This launching the auction of mines, might prove to a great move turning crisis into opportunity .The companies may not benefit in the short run, but in the long run this might prove to be beneficiary . The  focus was to not on investing on new kind of capacity, but utilise the older ones.