Cabinet clears CoalSETU to power industrial coal access

Marking a major reform in India’s coal sector, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved a new Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation CoalSETU by introducing a dedicated “CoalSETU window” under the existing Non-Regulated Sector (NRS) Linkage Policy.

The new policy modifies the 2016 NRS Linkage Auction framework to allow long-term coal linkages for any industrial use and for export, enabling any domestic coal consumer to participate in auctions. However, coking coal will not be offered under this window.

Currently, coal linkages for the NRS are auctioned for specific end-use industries such as cement, coking steel, sponge iron, aluminium, and others excluding urea-based fertiliser units and their captive power plants. The revised CoalSETU framework removes end-use restrictions for this new window, aligning with earlier reforms that opened commercial coal mining to all sectors without usage limitations.

Announcing the Cabinet approval, Union Minister Ashwini Vaishnaw said the initiative would improve ease of doing business, allow flexible and faster utilisation of domestic coal reserves, and help reduce reliance on imported coal. “The policy aligns with the Government's broader coal sector reforms, including the opening of commercial coal mining without end-use restrictions,” he said.

According to an official release, the fresh linkage window was needed in view of changing market dynamics and the government’s focus on accelerating deployment of domestic coal resources. Coal traders, however, will not be allowed to participate under the new mechanism.

The policy also permits linkage holders to use coal flexibly across group companies, enhancing operational efficiency. Washery operators will be eligible to bid for linkages, which is expected to increase the supply of washed coal in the country helping reduce imports and creating additional opportunities for coal exports.

However, the policy may encounter several challenges. These include logistics bottlenecks in coal transportation, variations in coal quality, and concerns among existing sectors about supply pressure as more bidders enter the system. Excluding traders may limit flexibility for smaller industries, while washed coal production may struggle to keep pace with demand. The policy must also navigate environmental compliance and India’s long-term transition toward cleaner energy, alongside uncertainties in global coal export markets.

With CoalSETU, the government adds another significant milestone to its ongoing reforms aimed at making the coal sector more transparent, industry-friendly, and aligned with India’s evolving energy requirements.