India's coal has traditionally been sold through linkages, auctions and fixed mechanisms dominated by large producers such as Coal India. The Coal Exchange Rules create a framework for regulated exchanges — like stock or commodity exchanges — where multiple buyers and sellers can trade coal transparently at market-discovered prices. Every exchange must maintain a settlement guarantee fund to back trades, with a significant portion kept in safe, liquid instruments such as government securities.

Coal remains central to India's power generation. A transparent exchange can improve price discovery, competition and efficiency in coal supply, reduce dependence on administered pricing, and give smaller buyers better access. It is part of a broader push to make India's energy and mineral markets more market-driven.