Industry, players hail govt's decision to further open coal sector

India Inc on Wednesday hailed the government's move to further open coal mining sector and allowing non-coal companies to participate in auctions without end-use restrictions.

In a bid to attract investments and boost domestic coal production, the Cabinet approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation ) Act 1957 and Coal Mines (Special Provisions) Act 2015 to open up coal mining in the country to non-coal companies while removing restrictions on end-use of the fuel.

Industry body CII said the government's decision to open up coal sector without end-use restrictions will help boost both production and mining efficiency.

CII President Vikram Kirloskar said allowing 100 per cent FDI in coal mining will help India not only to harness its coal reserves, which were earlier available only for captive use of steel and power, but also help many leading foreign players to establish operations in India with their new age technology in mining.

This will help unleash another source of energy in times of uncertainty in global oil prices due to the ongoing conflict in the Middle East, he said.

"The opening up of the sector without end-use restrictions will also boost both production and mining efficiency besides substituting import of coal worth about Rs 30,000 crore," he said.

During 2018-19, around 125 million tonnes of thermal coal was imported by India, resulting in a forex outgo of around USD 8 billion (about Rs 57,000 crore), CII said.

"The government's decision to do away with end-user restrictions in coal mining is a landmark reform. It shows its intent towards opening of the coal sector for attracting big ticket investments.

"With this, the government has addressed a key concern of global coal mining companies. We welcome this development and now expect a very positive response to coal mining auctions that are likely in the near future," Ajay Kapur, CEO - Aluminium & Power Business, Vedanta Ltd said.

Welcoming the move, Ficci said this decision will do away with the leeway provided to only steel, power and coal washeries and open the commercial coal mining bidding for all the firms.

"The Cabinet decision will also do away with end-use restrictions of the mining blocks and pave the way for the first leg commercial coal auctions within this fiscal.

"The move is expected to provide a big push towards efforts for auctioning of coal blocks for commercial sale. It will help attract investments from Indian and global corporates. This is also a major step towards realising the government's target to completely stop coal imports by power plants by 2024," said Dilip Chenoy, Secretary General, Ficci.

After the Supreme Court cancelled 214 coal blocks in 2014, only 29 were auctioned due to end-user restrictions. The amendments will remove these controls and will also improve the ease of doing business in the country.

Indian steel industry also welcomed the move with apex steel industry body Indian Steel Association (ISA) saying: