India has shelved a proposal to mandate coal imports for power plants as soaring international prices and a weakening rupee have made overseas supplies significantly more expensive. The decision comes amid concerns over declining coal stocks and rising electricity demand across the country.
The government had recently considered directing thermal power plants to blend imported coal with domestic supplies to ease fuel shortages. However, the high cost of seaborne coal, combined with currency depreciation and rising energy import bills, has made the proposal economically unattractive.
Instead, policymakers have asked state-owned Coal India Ltd to increase domestic production and urged the railway network to ensure timely coal transportation to power stations. The approach aims to replenish inventories and strengthen domestic supply without adding to the cost burden of imported fuel.
India’s coal inventories have fallen to their lowest levels in nearly five years, following sustained electricity demand, above-normal temperatures and reduced hydropower generation caused by below-normal rainfall. As of October 17, nearly half of the country’s power plants were reported to have critically low coal stocks, with inventories below a quarter of their required levels.
International thermal coal prices have climbed to their highest levels in three years, discouraging additional imports. A weaker rupee further increases the cost of dollar-denominated purchases, placing additional pressure on power generators and the country’s energy import bill.
The government is also monitoring electricity demand as seasonal temperatures begin to ease. Coal stock depletion slowed during the first half of October compared with September , offering some relief to the power sector.
The decision highlights India’s continued reliance on domestic coal production and efficient transportation to maintain energy security. Increasing output, improving rail logistics and rebuilding power plant inventories will be critical to meeting electricity demand while limiting exposure to volatile international fuel prices.