New Delhi: The government has reduced the floor revenue share and waived off the mandatory upfront payment for underground mining ventures in a bid to promote underground coal mining. “In a decisive step towards revitalizing India's coal sector, the Ministry of Coal has introduced a series of transformative policy measures aimed at promoting underground coal mining. These bold reforms address the traditional challenges of high capital investment and longer gestation periods, reaffirming the Government’s resolve to modernise the coal ecosystem while aligning with the broader vision of sustainable development,” said the Ministry of Coal in a statement on Thursday.
The floor percentage of revenue share for underground coal mines has been reduced from 4 percent to 2 percent. “This targeted reduction offers substantial fiscal relief and enhances the financial viability of underground projects,” said the Coal Ministry. In addition, the mandatory upfront payment requirement for underground mining ventures has been completely waived off. “This measure removes a significant financial barrier, encouraging broader participation from the private sector and facilitating faster project implementation,” said the ministry.
“These incentives are further complemented by an existing 50 percent rebate on performance security for underground coal blocks, collectively lowering the entry threshold and facilitating smoother project implementation,” said the statement.
Underground coal mining accounts for barely 4 percent of the total coal production in India because it is capital intensive. Since coal is the only fuel for which India does not depend on imports (except for coking coal which is not found in India in large quantities), the country has plans to utilise coal for as long as possible until the energy transition cycle kicks in. Around 75 percent of the electricity generated in India comes from coal. Therefore, the government is keen to pull all plugs to increase the domestic production of coal. Underground coal mines have been lying under-utilised, which is why the government has unveiled policy reforms to make it financially viable. The government has set a target of producing 100 MT of coal from underground coal mines by 2030.
