As per the current import policy, coal is kept under Open General Licence (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty. Government of India does not interfere in this matter. However, Ministry of Power advised power plants to import 10% of the total requirement of coal for blending purpose and ensure continuous power supply in the respective states. This decision was subsequently reviewed and decided. States and Ministry of Coal may decide the blending percentage after assessing the availability of domestic coal supplies. CIL was mandated to import coal for blending on behalf of thermal Power Plants of States and IPPS
Government has taken several steps to ramp up domestic coal production in the country. 100% Foreign Direct Investment is allowed for commercial mining. The major initiatives taken to increase domestic production of coal include Single Window Clearance, amendment of Mines and Minerals (Development and Regulation) Act, 1957 to allow captive mines to sell up to 50% of their annual production after meeting the requirement of the end use plant, production through MDO model, increasing use of modern technologies such as surface miner, continuous miner etc., taking up new projects and expansion of existing projects, and auction of coal blocks to private companies/PSUs.
As regards timely payment of coal price to the coal companies, GENCOs have been advised to adhere to timely payments and clear dues as well.
Custom duty applicable to coal import during the last three years was 2.5%. The same was revised for a short duration, exempting import duty on coal. However, exemption of import duty on coal has been again withdrawn. Presently custom duty applicable to import of coal is 1% BCD and 1.5% of AIDC totalling 2.5%. The reduction in import of coal may be attributed to a number of factors like fall in coal demand during covid-9 pandemic, higher coal production and dispatch in post covid period etc. However, in current year of 2022-23, coal import shows increasing trend due to increase in coal demand.
For reason mentioned at para-a above, import of coal by power sector increased during the current financial year of 2022-23. As against the total import of 27MT by power sector in entire year of 2021-22, the import of coal by power sector in first 7 months increased to 38.84 MT. However, much of the increase in import has gone to feed domestic coal-based plants and the restoration of power generation by ICB plants to its potential level has remained slow.
In order to promote use of biomass pellets in coal based thermal power plants, Ministry of Power revised the earlier policy of 2017 on Biomass Utilization in power plants in October 2021 to mandatorily co-fire the suitable biomass pellets in the range of 5% to 7% in all coal-based power plants depending upon their type of milling system. As per record of Sustainable Agrarian Mission on use of Agri-Residue in Thermal Power Plants (SAMARTH), total 83,888 Metric Tonne biomass has been co-fired in power plants till October 2022.
