According to the report of the Working Group of Coal and Lignite for the 12th Five Year Plan, coal demand in India is projected to grow at a CAGR of 7.1% till 2016-17 and reach 980.5 MnT
Indian coal exploration sector has a history of about 220 years beginning in 1774. When it comes to coal reserves and production quantum, Indian coal industry with its 293.5 bn ton of coal reserves, is one of the largest in the world. Indian coal is characterized by its high ash (45%) and low sulphur content. In the past few years, the sector has attained significant thrust, government attention and investments, yet there exists a vast coal deficit on account of uneven demand-supply ratio which has only grown despite of gigantic resource base. India today, is compelled to depend greatly on imports. Further, demand for thermal and coking coal is constantly rising from various consumer sectors in the country.
India’s coal production has increased from 431 million tons (MnT) in 2006-07 to 554 MnT in 2011-12 (an increase of 28.5%). On the other hand, demand for coal has grown at a CAGR of more than 7% in the last decade and has reached around 696 MnT (2011-12) as against the production growth of 5%. It is further anticipated that coal production will grow at a CAGR of around 7-9% during 2013-14.
Coal imports to India began as early as 1895 from UK at first. Import has expanded by more than four times in the past 10 years. India imported 23 MnT in 2002-03 which moved up to 99 MnT in FY 2012 and crossed 100 MnT in April-December 2012. Imported coal accounts for nearly 15% of the total coal consumption in India. At the termination of 12th five year plan, demand for thermal coal is estimated at around 913 MnT with an indigenous supply of nearly 760 MnT with CIL accounting 595 MnT in all. This will create a gap of about 165 MnT. Total Coal imports to India is estimated to cross 200 MnT in the ongoing Five Year plan (2012-17).