India wants states to buy local coal but no import curbs planned

The government has asked states to buy coal from Coal India Ltd's growing stockpiles but won't place curbs on imports, a senior coal ministry official told Reuters ahead of the allocation of new mines to state firms.

Coal India, the world's largest miner of the fuel, has boosted output at a record pace over the past two years, aided by faster environmental and other clearances under Prime Minister Narendra Modi's government.

Though an age-old coal shortage has now turned into a surplus, demand has not grown as fast as expected, leading to massive mounds of unsold coal and generating speculation among some industry officials that the government would introduce some kind of curbs on imports to help Coal India out.

Coal Secretary Anil Swarup said on Tuesday that the fuel was a key raw material for various industries and the government was not considering import curbs, though it did want state power generators to buy coal locally, given the production surge.

"We want them to buy but can't force anybody," said Swarup, who attended a conference of state power, energy and renewable energy ministers last week.

India's coal imports fell for the first time in five years in the fiscal year ended March 31, but some firms are still importing better-quality thermal coal used to generate power.

Steel-making coal is not abundant in India, so imports of that variety will continue unabated though volumes are much lower than for thermal coal.

Later on Tuesday, Swarup will release a schedule of mines to be allocated to state government companies without any restrictions on their end use, called commercial mining.

As of now, government-controlled Coal India dominates mining of coal for sale and the soft current demand means the ministry will delay the auction of commercial mines to private firms.

"There will be no value if we do it now," he said. "There's no demand for (private commercial coal mines) as of now."