Indian steam coal imports: the great equation

Since 2012, Indian steam coal imports have more than doubled, making India the world’s second-largest coal importer after China. With the decline of Chinese import demand since 2014, India has been considered by many to be the last bastion of significant coal import growth. However, India’s government has announced its intention to cease steam coal imports by the end of 2017. Given the general consensus that India’s coal demand will remain robust, these two diverging positions are thus based on differing perceptions of future coal production in India. This report seeks to establish India’s role in the global steam coal trade through a comprehensive assessment of the ‘coal equation’: supply and demand in relation to India’s coal policy. The report analyzes the major drivers of future coal demand and particularly focuses on the power sector, given its overwhelming share of India’s coal demand. It also looks at the reforms currently underway in the mining sector and their potential to make the sector more efficient, thus facilitating the dramatic growth in production that would be required to make India self-sufficient. The analysis is supplemented by quantitative assessments of steam coal supply and demand to FY2020. The results of these assessments indicate that the government is likely to reach its self-sufficiency goal, but this will be towards the end of the decade, rather than at the end of 2017 as desired. In order to cease steam coal imports, India’s government will specifically need to address constraints relating to the low quality of Indian coal, in addition to resolving transportation and land acquisition issues