Coal Ministry outlines incentives, sustainability and restoration drive for coal sector

The Ministry of Coal (MoC) has launched a suite of measures to modernise the coal industry, reduce import reliance and restore mined lands, reported the Press Information Bureau (PIB). Union Minister Shri G. Kishan Reddy provided details in a written reply to the Rajya Sabha.

The ministry approved an incentive scheme of Rs 85 billion on January 24, 2024, to support coal and lignite gasification in both public and private sectors. Coal India Limited has invested in two joint ventures with BHEL and GAIL to undertake gasification projects. Under the Non-Regulated Sector linkage policy, a “Production of Syngas” sub-sector was established in 2022 to reserve coal for gasification, and a 50 per cent rebate on the revenue share has been introduced in commercial coal block auctions for projects that utilise at least 10 per cent of their output in gasification. To date, seven projects have secured support: three PSU schemes receiving Rs 13.5 billion each, three private ventures sharing Rs 19.83 billion, and one small-scale project granted Rs 1 billion in aid.

To reduce coal imports, the Ministry has lifted Annual Contracted Quantities to 100 per cent of normative requirement. It extended coking-coal linkages under the NRS auction policy to 30 years and guaranteed full Power Purchase Agreement requirements for existing power-sector linkage holders. An Inter-Ministerial Committee formed in May 2020 oversees import substitution via a Coal Import Monitoring System. A new NRS sub-sector for steel uses coking coal through the washed-dried-oxide route and a Coking Coal Mission was launched to boost domestic supply. Under the Updated SHAKTI Policy 2025, imported-coal-based plants and existing fuel-supply holders may secure additional coal beyond their contracted quantities.

The ministry has also mandated regular reviews to accelerate coal-block development and enacted the MMDR Amendment Act 2021 to allow captive-mine owners to sell half of their output. A single-window clearance portal and a Project Management Unit support early mine operationalisation. Commercial mining auctions now feature revenue-sharing, 50 per cent rebates for early production and gasification incentives. Liberal terms permit 100 per cent foreign direct investment and no end-use restrictions.

Coal and lignite PSUs have launched sustainability measures to reduce carbon intensity and rehabilitate mined areas. They conduct afforestation around mines, deploy LED lighting, EVs and energy-efficient equipment, and reuse treated mine water for community and industrial needs. Overburden material is processed into construction sand through four plants and five M-Sand units. First-Mile Connectivity projects and blast-free mining technologies cut diesel use and emissions. PSUs have begun renewable power projects and clean-coal initiatives such as coal-bed methane and gasification.

Between FY 2020-21 and FY 2024-25, CIL, NLCIL and SCCL reclaimed 9,156.6 hectares of mined land across coal-bearing states, with Telangana alone restoring 3,059.5 ha. The PSUs aim to reclaim and afforest 2,800 ha in FY 2025-26. They also partner with the Ministry of Jal Shakti to treat and reuse mine water, install rainwater harvesting, build check dams and monitor aquifers under CGWA guidelines.