India`s import of coal rose 12 percent to 18.5 million tonnes in June from a year earlier. Coal import in the month of June was highest in 2014 and mainly driven by prevailing low global coal prices due to low demand in China and other major European countries. India’s imports coal from countries like Indonesia, Australia and South Africa.
Furthermore, sluggish domestic production was also responsible for high coal imports. Presently, Coal India (CIL) is the only producer of domestic coal accounting for around 80 percent of the domestic production. CIL is struggling to meet domestic coal requirements and dug out only 34.54 million tonnes coal in June, which was 6 percent less than expected. Moreover, CIL production fell 4.21 percent short of its production target to 462.53 million tonnes in FY14 amid concerns like shutdown of mining activities in Talcher Coalfields in Odisha. In the near term, coal imports would continue to rise because of prevailing attractive prices and possibility of further softness in international prices.
Currently, Indian domestic coal demand is around 35 percent higher than domestic supply. Acute coal shortages in the country have become primary reason for power deficit as coal-fired plants account for 59% of India's installed electricity capacity. Meanwhile, in order to meet India’s growing coal demand, the government has planned to allot coal mines directly to private players under public-private partnership (PPP) mode, which would also end the monopoly of public sector unit Coal India.