India Seeks to Slash Thermal Coal Imports by 30% in 2026; Power Plants Directed to Ramp Up Domestic Blending

 India, the world's second-largest importer of thermal coal, wants to cut those imports for power plants by at least 30%, asking them to test increased blending with domestic coal, government and industry officials familiar with the plan said.

India's power plants used nearly 50 million tons of imported coal in 2025 from countries like Indonesia, South Africa and Russia. The government aims to cut this by at least 15 million tons this year, said two government officials and one industry source.

The South Asian country still relies on coal for three-fourths of its electricity generation, even as it ramps up renewable energy at a record pace toward its 2070 net-zero goal.

New Delhi wants to reduce reliance on imports for the country's nearly 17 gigawatts of power plants built to run on imported coal as government-backed Coal India and private miners have boosted domestic coal production.

Authorities aim to replace at least 20% of imported coal with domestic supply at most plants, with some able to go up to 30%, government and power company sources said.

The seven people Reuters spoke to did not want to be named as they were not authorised to talk to the media.

India's coal and power ministry did not respond to Reuters emails seeking comments.

The government has long sought to cut coal imports for the power sector, but those efforts have failed as power plants have been unable to burn lower-quality local coal.

An executive with a power plant in western Gujarat state said power plants won't be able to use as much domestic coal as the government wants without totally recalibrating their boilers, which would be very costly and require state subsidies.

However, the government has assured power producers that domestic coal supplies will be of high quality, one of the people involved in the testing said.

Coal India has been struggling with inventories of around 90 million tons as of December 31, after producing a record 781.1 million tons in the fiscal year to March 2025. That made up nearly 80% of India's total coal output last fiscal year.

To pare stockpiles, Coal India has opened up exports to Bangladesh, Bhutan and Sri Lanka.

India's thermal coal imports, second only to China, fell 6.2% in 2025, the steepest drop since 2021, as power demand declined in milder weather.

Despite plans to raise coal-fired capacity by 97 GW to 307 GW by 2034-2035, India's thermal coal imports are expected to slow gradually as newer coal plants are likely to come up in areas closer to domestic sources, said Rajiv Ramnarayan, chief executive of Singapore-based coal trader Equentia Natural Resources.

The share of imported thermal coal is expected to gradually shift from the power sector to non-power industries such as cement and sponge iron, said Vasudev Pamnani, director at iEnergy Natural Resources, a coal trader.

"Imports of lower and mid-calorific value coal are projected to decline gradually, offset by domestic supply, with imports limited to industries requiring specific qualities or higher-grade coal," Pamnani said. 

Also read: 'AI May Pose A Serious Challenge To Our Self-Worth': Sridhar Vembu