India’s dependence on imported coal for power generation continued to decline in FY26, with coal imports by thermal power plants falling 27.4% year-on-year as the government stepped up domestic coal supplies and strengthened logistics infrastructure.
According to data shared by the Ministry of Coal, thermal power plants imported 45.4 million tonnes (MT) of coal during FY2025-26, compared with 62.5 MT in FY2024-25.
Imports by Imported Coal Based (ICB) power plants also declined, with shipments dropping to 2.88 MT in April 2026 from 3.97 MT in April 2025, registering a 27.45% decline.
Domestic coal supply improves
The government attributed the decline in imports to a series of policy initiatives aimed at increasing domestic coal availability and reducing reliance on overseas supplies.
Among the key measures was the increase in the Annual Contracted Quantity (ACQ) to 100% of the normative requirement for eligible power plants, enabling higher domestic coal allocations.
The government also decided in 2022 to ensure that coal companies supply enough coal to meet the entire Power Purchase Agreement (PPA) requirements of existing power sector linkage holders, irrespective of trigger levels or ACQ limits.
Revised SHAKTI policy
The Revised SHAKTI Policy, 2025 has further expanded domestic coal access by allowing imported coal based plants to procure domestic coal.
Existing fuel supply agreement (FSA) holders have also been permitted to procure coal beyond their contracted quantities after lifting their full ACQ entitlement, helping generators meet additional demand without resorting to imports.
The government said coal linkages under the newly created CoalSETU window for the non-regulated sector would improve the availability of washed coal and further reduce import dependence.
Logistics infrastructure strengthened
To improve coal evacuation, the Ministry of Coal is implementing an Integrated Coal Logistics Plan in coordination with other ministries and stakeholders.
The initiative includes the development of 33 critical railway projects, expansion of First Mile Connectivity (FMC) infrastructure, enhancement of rail evacuation capacity and promotion of multimodal transportation through rail, coastal shipping and inland waterways.
The government plans to establish 139 FMC projects with a combined capacity of 1,319 MT by FY2030, while coal public sector enterprises are implementing eight railway projects in coal-bearing states to improve transportation efficiency.
Domestic coal remains competitive
While coal imports continue to remain under the Open General Licence (OGL) regime, allowing consumers to source coal globally, the government said its focus remains on boosting domestic production and eliminating non-essential imports.
It added that the removal of the GST compensation cess has improved the competitiveness of domestic coal compared with imported coal.
Coal India Ltd has kept coal prices largely stable, with the notified price for most coal grades increasing by only ₹20 per tonne over the past eight years.
The company has also conducted multiple auctions under Window-II of the Revised SHAKTI Policy during 2026, enabling power producers to secure coal at near-zero premiums for their short-, medium- and long-term requirements.
The details were shared by Union Minister of State for Coal and Mines Satish Chandra Dubey in a written reply in the Rajya Sabha.