India is moving to slash thermal coal imports for its power sector by at least 30% this year, according to government and industry sources, as New Delhi pushes to curb reliance on overseas supplies.
The country, the world’s second-largest importer of thermal coal after China, used nearly 50 million metric tons of imported coal in 2025 for power generation, sourced mainly from Indonesia, South Africa and Russia. Officials said the government wants to cut that by at least 15 million tons.
Authorities have asked power plants including nearly 17 gigawatts of capacity designed to run on imported coal to test higher blending ratios with domestic coal. Most plants are expected to replace at least 20% of imports with local supply, with some targeting up to 30%.
The move comes as state-run Coal India ramped up output to a record 781.1 million tons in the fiscal year to March 2025, contributing about 80% of national production, while inventories swelled to around 90 million tons by end-December.
New Delhi has long sought to reduce coal imports, but past efforts faltered because many plants struggled to burn lower-grade domestic coal without costly boiler modifications. Some executives warn significant recalibration would require government subsidies.
Officials say the government has assured producers that domestic coal quality will improve to support the transition.
India still relies on coal for roughly three-quarters of its electricity generation, even as it accelerates renewable energy deployment under its 2070 net-zero target.
Thermal coal imports fell 6.2% in 2025, the sharpest drop since 2021, aided by milder weather that dampened power demand.
Despite plans to expand coal-fired capacity by 97 gigawatts to 307 GW by 2034-35, analysts expect imports for the power sector to gradually decline as new plants are built closer to domestic mines.
Traders say imported coal demand may increasingly shift to non-power industries such as cement and sponge iron, which require specific or higher-grade coal not readily available at home.