100% FDI now allowed in Coal Mining

The Union Minister for Commerce announced the approval for over 100% foreign direct investment (FDI) in coal mining and associated infrastructure. This will prove to be a major flip to the coal mining and thermal power generation sector of India while it is a let down to the environmentalists who have been requesting the Indian Government to shift its focus to other, cleaner sources of energy.

What has happened?

  • The Indian Government has initiated plans to make a fundamental shift in the mining and production of Coal.
  • Till date, only the Coal India Ltd (which is a central PSU) was allowed to transact, i.e. mine and sell coal in the country.
  • Other companies, both the private and public sector companies which had captive mines were only allowed to ming the coal but could sell only 25% of the coal on the open market, keeping the rest for their use, even in lean seasons which caused issues with their productivity. 
  • The Indian Government has now allowed the deregulation of the sector private companies and they will also now be able to freely mine and sell coal as per their need.

Why was this necessary?

  • The Indian economy which is rapidly growing and industrializing need a lot of energy to grow. This energy can come from all sources but we are currently dependent majorly on the thermal sources of power.
  • This form of energy is generated by the burning of raw fuel, primarily coal or crude oil or natural gas. In India, most of the power plants burn coal and the CIL has been incapable of meeting the coal demand of the country.
  • This has prompted the Indian Government to bring in foreign companies to mine and sell coal.
  • This will bring in more professional miners, money, and technology in the country and will have a positive impact on the Indian Economy.

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