Govt wants to allow captive mines to sell 50% of coal, lignite in open market

• The move is aimed at augmenting the domestic production of coal and increasing its availability in the Indian market

• The draft proposal said that an additional amount will be charged on the sale of the coal/lignite

New Delhi: Taking another step towards freeing the coal sector and deepening competition, the government has floated a draft proposal to amend laws for permitting the sale of 50 percent coal and lignite produced by captive mines and has sought comments from various stakeholders, including governments of coal-rich states and general public. The government had reiterated its intention to allow sale of coal from captive mines on several occasions previously. The move is aimed at augmenting the domestic production of coal and increasing its availability in the Indian market.

The Ministry of Coal has urged stakeholders to send their comments by February 25, 5 pm.

In FY20, India spent Rs 1.58 lakh crore on importing coal: Govt

While noting that India's coal import has been increasing on year-on-year basis, the Ministry of Coal noted that increasing the domestic availability of coal for core industries is a must for creating an Atmanirbhar Bharat. "In India, import of coal is increasing on year on year basis. In 2015-16, India imported 203.95 Million Tonne (MT) of coal which was increased to 248.54 MT in 2019-20 and consequent spending of around Rs 1.58 lakh crore in foreign exchange. Coal being an important input for various core sector industries, increasing its availability would lead to Atmanirbhar Bharat. Allowing sale of coal from captive mines will help in increase in production of cold and increase coal availability in the market, leading to reduction in import of coal," the notification released by the ministry said.

And therefore, the government has proposed an amendment to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) in relation to coal and lignite.

Additional amount to be charged on sale of coal, lignite

The draft proposal said that an additional amount will be charged on the sale of the coal/lignite. The Centre has proposed various additional amounts to be charged for various categories of mines, ranging between two times of the royalty payable to 50 percent of the royalty payable. "It is further proposed to specify the additional amount payable on such sale in the Act itself instead of leaving it to be specified under the rules framed under the Act in the same manner as will be specified for the other minerals," the government has said.

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The backdrop

The government had announced its decision to open up the coal mining sector for commercial mining in May 2020. In line with that announcement, the government auctioned off 19 coal blocks in November 2020 for commercial mining on revenue-sharing basis. The government has said that India, which has the world's third-largest coal reserves, should not be importing coal from outside. And in order to increase the domestic availability of coal, the government has opened the coal sector up for private participation. 

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