The Great Coal Import Conundrum Amid Deafening Silence of CAG

Burning Profits, Scorching Citizens: The Coal Import Conundrum and India’s Energy Dilemma

By P. SESH KUMAR

NEW DELHI, June 19, 2025 – Despite sitting on one of the largest coal reserves in the world — enough to last over 550 years — India imported over 1,645 million tonnes of coal between 2013 and 2023, draining $133 billion in foreign exchange and inflicting a notional ₹49,977 crore revenue loss in just three recent years.

While officials claimed “peak power demand” and “logistical bottlenecks,” the data suggests a far murkier reality — avoidable imports, lost royalties, inflated power tariffs, and a silent squeeze on Indian citizens and the exchequer.

In Parliament, the Government admitted that power from domestic coal costs just ₹1.27 per unit. But imported coal? As high as ₹9.04 per unit. And who pays? The common man.

Meanwhile, power plants running solely on imported coal — set up even as India pledged to end imports — remain insulated from scrutiny, passing costs freely to consumers while potentially reaping windfall profits.

Shockingly, the Comptroller and Auditor General (CAG) — India’s constitutional watchdog over public finances — appears to have remained conspicuously silent on this systemic hemorrhage. There has been no holistic audit examining whether these coal imports were truly essential, whether prices were justified, whether over-invoicing or profiteering occurred, or whether revenue losses could have been averted by boosting domestic production. This absence of an overarching audit undermines the very purpose of public accountability — and leaves a gaping hole in the energy governance discourse.

India’s continued reliance on imported thermal coal has sparked a heated debate over the financial prudence, policy consistency, and national interest behind this practice. On one side lies the argument that imports were indispensable to meet peak power demand due to inadequate domestic production. On the other side is a powerful contention that such imports were avoidable, driven by policy inaction and possibly vested interests, resulting in massive revenue losses, higher electricity tariffs for citizens, and a betrayal of the promise of Atmanirbhar Bharat.

Coal, Energy, and the Faultline of Dependency

Coal remains the cornerstone of India’s energy ecosystem, accounting for 55% of the country’s total energy requirements. With reserves of over 3.78 lakh million tonnes, India’s domestic coal stock, if exploited judiciously, experts say these could last over 550 years at current consumption levels. Yet, in the decade between 2013 and 2023, India imported over 1,645 million tonnes of coal, at a cumulative foreign exchange outgo exceeding USD 133 billion. The following table (Source: Ministry of Mines website) has the details:

Year	Qty of coal imported in million MT	Value in INR	Value in US$	Value per ton in INR
		In million
2013-14	129.99	574973.16	9536.52	4423.21
2014-15	168.38	707585.71	11559.46	4202.31
2015-16	159.39	577818.53	8836.58	3625.19
2016-17	149.36	590772.69	8809.64	3955.36
2017-18	161.24	789543.41	12247.55	4896.70
2018-19	183.51	988707.26	14171.33	5387.76
2019-20	196.70	914652.23	12794.73	4649.99
2020-21	164.05	706688.44	9539.41	4307.76
2021-22	151.50	1259932.89	16871.79	8316.39
2022-23	181.62	2297444.02	28749.17	12649.73
Total	1645.74	9408118.34	133116.18

 

In just three years (2020–23), someone can easily say that this translated into a potential revenue loss of approximately ₹49,977 crore in GST, mining royalties, DMF, and NMET as indicated in table below: (average price of coal worked out based on national price index of coal released by the Ministry of Coal)

Year	Import of coal by imported coal based plants (In million tons)	Average price of G 4 – G11 grades of coal (grades used for power plants) during the year	Value of G4 –G11 grades of Coal as per average national coal index vis-à-vis total coal imported during the year (in crore)	Mining royalty @14 per cent on the total value (in crore)	DMF @ 30 per cent of royalty /NMET @ two per cent on Royalty (in crore)	Total value with royalty, DMF & NMET (in crore)
2020-21	164.05	2,663	43686.51	28,670.80	8601.24 DMF 573.42 NMET	242636.92
2021-22	151.50	3,965	60069.75
2022-23	181.62	5,563	101035.20
Total	497.17		204791.46

and a possible tangible burden passed on to consumers through inflated electricity tariffs. These numbers have given rise to serious questions: were these imports truly unavoidable? Or were they driven by negligence, policy paralysis, or worse — collusive profiteering?

The Argument for Imports: Practical Constraints and National Priorities

Those defending coal imports offer multiple justifications. Chief among them is the mismatch between domestic production capacity and peak demand. Despite rising power requirements, domestic coal production has often fallen short, particularly in summer months when air conditioning load spikes dramatically. Ministries have stated in Parliament that blending of imported coal has been ongoing since 2009-10 and is necessary to bridge the supply gap. Moreover, some power plants — particularly 15 plants built to run exclusively on imported coal — were designed for specific grades of coal not available domestically, particularly in terms of calorific value and ash content.

Another technical consideration relates to extraction and logistics. While reserves may be vast, mining them is another matter. Coal India Limited (CIL) and SCCL have limited ability to rapidly ramp up extraction to meet surge demand. There are lag times in opening new mines, environmental clearances, land acquisition hurdles, and infrastructural constraints in transporting coal from pitheads to power plants. In such a context, importing coal becomes a risk-management tool — a safety valve to prevent grid collapse and ensure uninterrupted power supply.

Finally, defenders could argue that imported coal is subject to taxation too — notably IGST and a compensation cess of ₹400 per tonne. While these may not mirror the full royalty and DMF structure applied to domestic coal, they still contribute revenue to the government. The Centre’s claim that imported coal is not a total fiscal drain rests on this premise.

The Counter-Argument: Avoidable Imports, Lost Revenues, and Higher Power Tariffs

Yet, these narratives falter under close scrutiny. Deeper study and findings would reveal that during 2020–23 alone, domestic coal-based plants imported 98.8 million tonnes of coal, while purely import-dependent plants brought in 160 million tonnes — totalling 259 million tonnes. This came at a time when the Ministry of Coal had repeatedly declared in Parliament that India had sufficient coal reserves and would soon cease all thermal coal imports. These contradictions point to a deeper malaise: policy inconsistency and lack of inter-ministerial coordination between the Ministries of Power and Coal.

A closer look at the documents available with the CERC reveal that power generated using domestic coal cost, on average, ₹1.27 per unit, while the same generated using imported coal ranged from ₹5.25 to ₹9.04 per unit, depending on international coal prices (which in 2022–23 touched ₹12,650 per tonne). The Government had confirmed in the Parliament that these costs were passed on to distribution companies — and ultimately, to the common consumer and it has no control in it. The Ministry of Power, in its 2023 reply to Parliament, washed its hands of this impact, stating that the price fixation was between generating companies, Discoms, and the CERC — not the government. In short, citizens bore the cost of this policy confusion.  Disturbingly, the moot question – whether the prices of imported coal is fair and represents the actuals sans profiteering remains unanswered as the Government apparently has instituted no verifiable system or control to ensure that undue price-jacking is not built up to yield windfall gains for the power plants or companies engaged in it. Rather, the same appears to have been left open for exploitation at the cost of the common man.

The fiscal loss argument also gains weight. The use of imported coal meant a direct loss of state royalties, District Mineral Foundation (DMF) levies, National Mineral Exploration Trust (NMET) contributions, and GST. While some of these levies are not applicable to imports, the computation of ₹49,977 crore as a notional loss over just three years points to the revenue foregone had the same quantity of coal been mined domestically. Critics point out that GST on imports (IGST) is creditable and largely refunded to importers, meaning the Centre and states get little in net tax terms — especially when compared to the multi-tiered revenue stack on domestic coal.  Some may like to brush aside the loss worked out as notional.

This would need to be seen in the context of national declaration on five nectar or Panchamritat (the COP 26) where India declared to achieve 50 per cent of total country’s energy needs from renewable energy resources and attain net zero by 2070.  These targets when seen against the fact that the country has coal storage to serve for atleast 550 years would indicate that the country actually lost the opportunity to earn the much needed revenues for its exchequer which would have not only helped us in getting closer to the Atmanirbhar Bharat or self-reliant India It could be argued that the revenues on such coal used to generate power in India went to other exporting countries.

While, the exporting countries got revenues, the private importers got their share (including questionable wind fall gains), power companies/plants passed on the high prices as tariff (without any checks and balances as confirmed by the Government in Parliament)only losers were the exchequer which lost revenues and common man who ultimately bore the brunt by paying higher power costs.

Policy Contradictions and Vested Interests

Perhaps most damning is the policy contradiction of continuing to approve power plants that run solely on imported coal while publicly/legislatively vowing to stop coal imports. If India is truly on the path of self-reliance — as championed under the banner of Atmanirbhar Bharat — then setting up coal-fired plants dependent on foreign-origin fuel undermines this very goal.

The existence of these 15 plants also locks India into a long-term import cycle, putting pressure on forex reserves, exposing the country to international price shocks, and creating dependencies that could be geopolitically risky.  And above all, deny the legitimate rights and opportunity of the citizens to get power at cheaper costs.

Moreover, concerns of profiteering and over-invoicing in coal imports have been flagged in Parliament by figures such as Jawhar Sircar, with little response from the government. Imported coal prices, often pegged to global indices, are vulnerable to manipulation. The CAG’s audit of NTPC’s earlier imports had found negligible improvement in calorific value despite higher prices, leading to questions about the real benefits of such imports.

Does Domestic Capacity Hold the Key?

Sceptics of the import critique often point to the limitations of Coal India Limited. But NTPC’s experience offers a rebuttal. Once a major

importer, NTPC has reduced imports to just 8% by relying on captive mines and ramping up indigenous sourcing  — a model that could be emulated. The government itself has acknowledged that India’s coal reserves are sufficient and has announced that substitutable thermal coal imports will stop by 2024–25. If this is truly feasible, why did it take a decade — and hundreds of billions of rupees in losses and foreign exchange outgo — to act?

Furthermore, the government’s own reforms such as the MMDR Amendment Act, single-window clearance for coal blocks, and the launch of a coal auction portal demonstrate that domestic coal production can be accelerated with political will and bureaucratic efficiency. It also raises the uncomfortable question: were these measures deliberately delayed to benefit certain players?

A Smoky Mirror of National Priorities

The coal import saga is more than a fiscal or environmental issue — it is a test of national governance. On one hand lies the argument of pragmatic necessity: that India needed coal, couldn’t mine it fast enough, and had to buy it abroad. On the other is the more disturbing — and now, increasingly persuasive — argument that this was not just avoidable but orchestrated: driven by vested interests, political funding compulsions, and a failure to align the policies of energy security, fiscal prudence, and consumer welfare.

India’s vast coal reserves, long-term environmental commitments under COP26, and the availability of alternative energy sources all make the case for domestic self-reliance stronger than ever. Continued imports not only undermine fiscal revenue but also raise power costs for ordinary citizens, contradict public policy, and expose the economy to foreign volatility. If India truly aspires for energy independence and economic sovereignty, then reducing — if not eliminating — its dependence on imported coal must be a national priority.

The time for coal-fired excuses has run out. Now is the time for a clean break — from contradictions, from complacency, and from costly dependencies.

(This is an opinion piece; views expressed solely belong to the author, who served as DG of the CAG)

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