India is set to launch its first coal exchange soon, with the aim of providing a larger market for the commodity and establishing a transparent benchmark price. The exchange will allow buyers and sellers of coal to trade, with options available in terms of coal grade and location.
The creation of an independent regulator for the exchange is being considered to ensure fairness and transparency, especially since the market was opened up to private players in 2020 for commercial mining. Commercial players, including state-run miner Coal India Ltd, are expected to be key participants on the exchange.
A draft cabinet note has been circulated for interministerial consultations, but finalization is pending due to discussions around the need for a new regulator. The exchange is expected to handle a significant amount of surplus coal from Coal India and its subsidiaries, estimated to be around 200 million tonnes annually.
India has seen a significant increase in coal production, reaching 997.4 million tonnes in the previous fiscal year. Coal India alone produced 773.6 million tonnes in FY24, a 10% increase from the year before. The ministry of coal recently opened bids for the 10th round and second attempt of the ninth and eighth rounds of commercial coal mines auction, with 43 bids received for 16 coal mines out of the 61 offered in the 10th round.
Overall, the launch of the coal exchange and continued expansion of the coal mining sector reflect India’s efforts to meet growing demand and ensure the efficient management of its coal resources.
