Decline in Coal Imports: Thermal Power Plants Reduce Import Dependence
UPSC / SSC current affairs note · Economy
Why in news
In FY 2025-26, total coal imported by thermal power plants fell by 27.4% to 45.4 million tonnes from 62.5 million tonnes in FY 2024-25. This significant decline reflects the government's success in reducing import dependence through policy measures.
Background
India has been striving to reduce its reliance on imported coal to save foreign exchange and ensure energy security. The government has implemented various measures including increasing domestic coal production, improving logistics, and revising power policies.
Key facts
Thermal power plants imported 45.4 MT coal in FY 2025-26, down 27.4% from 62.5 MT in FY 2024-25.
Imported coal-based plants imported 2.88 MT in April 2026, down 27.45% from 3.97 MT in April 2025.
Annual Contracted Quantity (ACQ) was raised to 100% of normative requirement for non-coastal plants (from 90%) and coastal plants (from 70%).
Government decided in 2022 to supply coal to all existing linkage holders irrespective of trigger and ACQ levels to meet full PPA requirement.
Revised Power Policy 2025 allows imported coal-based (ICB) plants to procure coal, reducing their import dependence.
Existing FSA holders can get coal beyond ACQ under Revised Shakti Policy 2025 after full ACQ uptake.
Coal Setu window under non-regulated sector linkage auction increases availability of washed coal, reducing imports.
Integrated Coal Logistics Plan includes 33 critical railway projects, expansion of First Mile Connectivity (FMC) infrastructure, and multimodal transport promotion.
139 FMC projects with 1319 MT capacity planned by FY 2029-30; 8 railway projects being implemented by coal PSUs.
Removal of GST compensation cess made domestic coal more competitive; CIL's notified prices increased only by ₹20/tonne over 8 years.
Prelims pointers
- Coal imports declined 27.4% in FY 2025-26
- Annual Contracted Quantity (ACQ) increased to 100% of normative requirement
- Revised Power Policy 2025
- Revised Shakti Policy 2025
- Coal Setu window
- Integrated Coal Logistics Plan
- First Mile Connectivity (FMC) projects
- Coal India Limited (CIL)
- Open General License (OGL) for coal imports
- GST compensation cess removal on coal
Mains angles
- Discuss the measures taken by the government to reduce coal imports and their effectiveness.
- Critically examine the role of policy interventions in enhancing energy security and reducing import dependence.
- Analyze the impact of logistics improvements on coal supply and import reduction.