Opening Coal Sector to Private and Global Firms to Reduce Coal Imports: Govt

Union Cabinet opened Coal Sector for commercial mining by giving nod to the promulgation of Mineral Laws Amendment Ordinance 2020. It will remove the criteria of ‘end-user restrictions‘, opening up coal mining to the private sector. The ordinance also relaxes FDI norms, inviting global companies to mine coal.

Crux of the Matter
  • The Amendment has removed the ‘end-user restrictions‘ criteria for mining coal. Now companies that are not in Steel and Power Sector can also mine coal. State-owned Coal India Limited will lose its monopoly over Coal Mining.
  • The Amendment has come right before Mining Leases expire this March. The move will act as a catalyst in auctioning coal blocks. Previously the government used to allocate coal blocks for mining. The Ordinance removes that requirement.
  • Any India-registered company can bid for coal blocks according to the proposed Amendment. Earlier, companies with prior experience were only allowed to do so.
  • The move aims at reducing India’s reliance on coal imports. Last year India imported 235 mn tonnes or worth INR 1.75 lakh of coal.
  • FDI will also enable global players to bring modern technology in the Indian Coal Sector.
  • “The move would speed up the process of implementation of projects, ease of doing business, simplification of procedure and benefit all the parties in areas where minerals are located,” said the Government.

History: Nationalisation of India’s Coal Sector – Unscientific mining practices adopted by some of them and poor working conditions of labor in some of the private coal mines became matters of concern for the Government. On account of these reasons, the Central Government took a decision to nationalize the private coal mines. The nationalization was done in two phases, the first with the coking coal mines in 1971–72 and then with the non-coking coal mines in 1973. In October 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971 provided for taking over in public interest of the management of coking coal mines and coke oven plants pending nationalization. The enactment of the Coal Mines (Nationalization) Act, 1973 determined the eligibility of coal mining in India. More Info