New Delhi: The Union Cabinet has approved the CoalSETU policy, a new framework designed to strengthen India’s energy security by improving domestic coal availability and reducing reliance on imports. Prime Minister Narendra Modi said the policy would enable seamless, efficient and transparent utilisation of coal while supporting economic growth and Ease of Doing Business.
CoalSETU, short for Auction of Coal Linkage for Seamless, Efficient and Transparent Utilisation, introduces a dedicated window within the existing Non Regulated Sector linkage framework. The policy allows coal linkages to be allocated through auctions on a long term basis for any industrial use, including exports. Under the new system, any domestic buyer requiring coal can participate in the auction process, expanding access beyond narrowly defined end use sectors.
The Cabinet decision follows a review of existing coal supply arrangements for non regulated users. The objective is to ensure faster utilisation of available coal reserves and address growing energy demand without increasing dependence on imported coal. The policy also aligns with broader reforms in the coal sector that opened commercial mining without end use restrictions.
Under the CoalSETU window, coal linkages will be granted for own consumption, export, coal washing or other permitted purposes, but resale within the country will not be allowed. Traders are barred from participating in these auctions to ensure that allocations directly support genuine industrial and operational needs. Linkage holders will be permitted to export up to 50 percent of their allotted coal quantity, creating new opportunities for value addition and overseas markets.
The government has clarified that existing auctions for specific end user sectors will continue alongside the new window. This dual structure is intended to preserve stability while offering greater flexibility to industries that require coal for diverse applications.
The policy also places emphasis on washed coal, anticipating rising demand in the coming years. Granting linkages to washery operators is expected to improve the availability of cleaner coal domestically, reduce imports and enhance efficiency for industrial users. Washed coal produced under the new framework may also be exported, further supporting revenue generation.
Overall, CoalSETU is positioned as a key reform to modernise coal allocation, improve transparency and ensure that India’s energy needs are met through reliable domestic sources as the economy continues to expand.
