The Indian Coal Industry

Coal represents 60% of India’s total power installed capacity, the country itself is one of the largest coal producing companies in the world. However, the prodigious industry and its 82% shareholder CIL (Coal India Limited) have undergone a massive decline in their production due to vast labour outbreaks and increase in the power of Trade Unions for the same. Coal and Automobile industries have acted as the backbone of the Indian Economy, as 56% of India’s commercial energy is met by coal and no industry can operate without energy. 5 major trade unions including the Bhartiya Mazdoor Sangh (BMS) took industrial action in the form of a one-day strike against the Coal India Limited on the 24th of September 2019 as the government decided to allow 100% FDI (Foreign direct investment) in the industry. Later in the week, the trade unions arbitrated with CIL for non-wage benefits like festive bonuses which have been permitted to 2.66 lakh coal workers at an amount of Rs.64,700 each, for Durga Puja.

Similar events registered a year-on-year (y-o-y) decline of 23.5% in production in September, as operations were impacted by labour issues and flooding of key mines due to heavy rains. An ICRA report stated, “Thus, to achieve the targeted annual coal production or come anywhere close to the annual guidance of 660 MT and, given the first half slippages, CIL would have to step up to an average run rate of 2.3 MT coal production per day for the rest of the year.”. Achieving an average run rate of 2.3 MT coal production per day and sustaining it for the rest of the year is a prodigious task as it has been difficult for the industry to maintain a rate of 2 MT per day for the same. The report also concluded that the industry would require more than 200 MT imports coal to power the commercial sector of the country. This would result in loss of foreign currency as imports would increase and one of the pillars of the power energy could have been recorded in CIL’s subsidiary - Mahanadi Coalfields where Rs.5.18 crore have been lost by the firm in the duration of two days. The firm became a victim of robbery and protest as they were responsible for breaking social norms in the region. Several other actions pertaining to the coal industry can be noticed throughout the country in the past few months. Due to monsoon, the region perishes in the long term as India gradually loses coal production each year. This could be seen as an environmental advantage as India would tend to invest more in its renewable energy sector.

The coal industry is likely to become more vulnerable if the production shortage persists, since rainfall still impacts the northern coal mines and plants which contribute to 50% of this inventory run-down. As the coal industry declines, the power sector is turning out to get more inclined towards other non-regulated industries for fuel. Thus, imports by the non- regulated sector to the country are expected to remain elevated for the year as well. Therefore, an action which gradually increases the production of coal must be taken to sustain the economy and supply energy to the commercial sector, and the environment is also not vastly harmed.