State-owned Coal India Ltd (CIL) has recommended that imported coal be allowed for trading on the proposed coal exchange, expanding the platform beyond domestic supply and improving price discovery for power plants dependent on overseas fuel.
“Imported coal could be traded through exchange hubs at suitable ports, enabling fair pricing for imported coal-based power plants and reducing chances of manipulation,” the company told Business Standard.
CIL clarified that its participation in the platform would be in addition to existing sales channels like e-auctions and long-term linkages. “This will provide one more avenue for offtake, without requiring additional operational changes,” it said.
Draft Rules Under Review
The Coal Ministry has recently sought public feedback on the draft coal exchange rules, part of broader reforms under the Mines and Minerals (Development and Regulation) Act, 2025.
Currently, auctions are conducted through supplier-specific platforms such as MSTC and M-Junction. Experts say a centralised coal exchange could replace these siloed systems, allowing multiple producers and consumers to transact directly, while boosting transparency and competition.
Challenges Ahead
However, experts caution that implementation hurdles remain.
- Long-term contracts between buyers and suppliers, which mandate minimum sale or purchase volumes, may complicate participation.
- Dispatch of surplus coal from captive mines and the possibility of trading at lower platform prices could create distortions.
- Risks of collusion among traders to bid high and redistribute coal must also be addressed.
- Integration of the National Coal Index into the platform will be another key challenge.
Despite these hurdles, industry observers believe the coal exchange has the potential to reshape India’s coal market, enhance efficiency, and support the country’s energy security.