NEW DELHI, India (Diya TV ) — India has shelved a proposal to require power plants to import coal as the country faces tight fuel supplies and rising electricity demand. Bloomberg News reported Monday that the government dropped the plan, citing people familiar with the matter.
The decision comes as high international coal prices raise the cost of imports. At the same time, India faces growing pressure to maintain reliable electricity supplies amid hotter-than-usual weather and increased power demand.
Instead of requiring power plants to buy coal from overseas, the government has asked Coal India to increase production. It has also urged the railway network to help transport coal to power stations, Bloomberg reported.
The move highlights India’s effort to balance fuel security, rising energy costs and the need to keep electricity flowing across the country.
The government recently discussed a proposal that would require power plants to blend imported coal with domestically mined supplies. The plan aimed to ease the current coal shortage and rebuild fuel stocks at power stations.
However, the government has now shelved the proposal, according to Bloomberg. The report did not provide a detailed explanation for the decision.
India has previously used mandatory coal imports to supplement falling domestic stockpiles. Such measures help power plants maintain sufficient fuel supplies when local production and deliveries cannot meet demand.
This time, however, international market conditions have made imports more expensive. Thermal coal prices have reached multi-year highs, increasing the cost of purchasing fuel from overseas suppliers.
Moreover, rising energy import bills linked to the US-Israel war with Iran have added pressure to India’s energy finances. The higher costs have made a nationwide coal import requirement less attractive.
Consequently, policymakers appear to favor increasing domestic production and improving coal transportation instead of relying on more expensive foreign supplies.
Coal India, the country’s largest coal producer, has a central role in the government’s response. Officials have asked the state-owned company to raise output to help power stations secure enough fuel.
However, higher production alone may not resolve the problem. Coal must also reach power plants on time, making transportation a key part of the supply chain.
The government has therefore asked Indian Railways to help secure deliveries to electricity producers. Reliable rail transport can reduce delays and help plants maintain their fuel reserves.
Together, higher production and better transportation could help India meet electricity demand without imposing a new import requirement on power generators.
Still, the effectiveness of this approach will depend on how quickly domestic coal supplies reach plants and whether production can keep pace with rising consumption.
The latest decision follows another government measure aimed at maintaining electricity supplies. India has ordered more than 100 captive coal-fired power plants to operate at maximum capacity from Oct. 1 through the end of the year.
These plants generally serve industrial facilities and other dedicated electricity users. Their increased operation could help the country meet additional demand during a period of pressure on the power system.
Meanwhile, hotter-than-usual weather has increased electricity consumption. Weather patterns linked to El Niño have contributed to concerns about higher demand for cooling and other electricity needs.
As temperatures rise, households and businesses may use more air conditioning and other electrical equipment. Therefore, power producers need steady fuel supplies to avoid disruptions.
Fuel shortages remain a major concern for India’s coal-fired power sector. Reuters reported in September that nearly 40% of India’s coal power plants had critically low fuel stocks.
Low reserves can leave power stations vulnerable to supply disruptions, especially when electricity demand increases quickly. Plants need regular coal deliveries to continue generating power at the required level.
Although the government has chosen not to mandate additional imports, its decision does not remove the underlying supply challenge. Domestic producers must deliver enough coal, while rail services must move it efficiently to power stations.
Furthermore, high international prices could limit the appeal of imported coal for some generators. The cost of overseas supplies may also affect decisions about how plants manage their fuel reserves.
India’s latest move reflects a broader challenge for one of the world’s largest electricity markets. The country must meet growing power demand while managing fuel costs and protecting energy security.
Coal remains a major source of electricity in India. As a result, shortages can affect power generation, industrial activity, and the reliability of electricity supplies.
For now, the government is relying on higher domestic output and improved transportation rather than a compulsory coal import policy. The approach could help control costs if producers and rail operators deliver enough fuel.
However, continued hot weather, rising electricity consumption and expensive international coal could keep pressure on power plants in the coming months. The ability to maintain adequate coal stocks will remain crucial as India works to meet demand through the end of the year.
