The coal ministry on Thursday announced incentives to boost underground coal mining in the country.
The government has reduced the floor revenue share — minimum percentage of revenue that the government or a designated authority will receive — from 4 per cent to 2 per cent to enhance the financial viability of underground coal mining projects.
The mandatory upfront payment has also been waived off to encourage more private sector participation in underground mining and facilitate faster project implementation.
“These initiatives are further complemented by an existing 50 per cent rebate on performance security for underground coal blocks, collectively lowering the entry threshold and facilitating smoother project implementation,” the coal ministry said.
Underground coal mining is more environmentally friendly compared with open-cast mining, but is more capital-intensive. The government expects that the incentives will address traditional challenges of high capital investment and longer gestation periods. The government also hopes that the measures announced will encourage adoption of advanced technologies such as continuous miners, longwall systems, remote sensing tools and AI-based safety mechanisms that can boost productivity while supporting ecological balance.
India’s coal production has grown 5 per cent in FY25 to reach 1047 million tonnes (mt) compared with 997.83 mt in FY24. Production crossing the billion tonne mark was largely backed by a 28.18 per cent growth from captive miners which produced 197.60 mt in FY25 compared with 154.16 mt in FY24. Coal India, which produced a total of 781.08 mt in FY25, also has ambitious plans to scale up production from underground mines.