Long-term procurement planning for coal-III: Increased Indian imports likely to jack up international prices

With the projected shortfall of 164 MT in the availability of domestic coal likely to be met via equivalent imports by 2016-17, India is poised to push up the local prices of coal internationally.

• This assertion is backed by the fact that, at present, only 600-700 MT of coal is available globally for trading. This quantity constitutes 10-12% of the total coal production of 6,000 MT across the world, implying that about 90% of coal is consumed where it is produced.
• In such a situation, a surge in demand of the magnitude of 20-20%, as envisaged if India indeed sources 150 MT of additional coal from the world market, will obviously drive prices in other countries upwards. This is likely to push governments to put restrictions on the amount of coal available for exports.
• Besides, the adoption of climate change-related policies will increasingly force coal-rich countries to opt for restricted mining of coal or at least levy taxes on the cross-border movement of the mineral. This will further restrict the availability of coal in the international market.8It is, thus, unlikely that India will be able to achieve its import targets in the medium to long run. Rapid augmentation of domestic coal production seems like a better idea.