1 Jun 2020

FDI in Coal sectorQuick read

  • Mining of Coal in India is governed by two laws→
    • Mines and Minerals Act of 1957
    • Coal Mines Act of 2015.
  • “Mines and Minerals (Development & Regulation Act) 1957” covers the rules and regulations related to all minerals
  • “Coal Mines Act 2015” (replacing Coal Nationalization Act 1973) covers rules specifically to coal mines.
  • Till 2015, Coal mines were given to private players on recommendation basis (not an auction) only for their specific use (also called Captive Mining).
  • That means if ABC power company asked for coal block then Govt used to give coal block/mine to ABC power company but they can use that only for ABC power company and not in another plant, even if the other plant belongs to the same person/owner.
  • This was amended recently and now the ABC power company can use that coal in any of its other subsidiary companies/ or any other plant of the same owner.
  • In 2015, the Coal Mines Act 2015, provided for Auctioning of coals instead of recommendation, BUT only for specific use (captive mining).
  • In Feb 2018, Provisions of Coal Mines Act 2015 was notified to auction coal mines even to EXTRACT and SALE/EXPORT coal (the earlier sale was not allowed only captive mining for own use was allowed). Extraction and Sale of coal are also called Commercial Mining.
  • In August 2019, 100% FDI was allowed in Commercial Mining but there were eligibility criteria that an FDI investor must have operations in coal mining in India now this restriction has also been removed.
  • This may also bring an end to state-run Coal India Ltd.’s (a Maharatna company) monopoly in the sector.

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