Commercial coal mining was opened in 2020 with no restriction on sale or end-use, no technical or financial eligibility conditions, and 100 per cent FDI allowed under the automatic route.
Coal auctions have migrated from allotment to a percentage revenue-share model, supported by the National Coal Index for market-linked pricing.
Coking coal has been notified as a Critical and Strategic Mineral under the MMDR Act, 1957, expediting environment and forest clearances for coking coal projects.
The SHAKTI policy has been simplified into two windows - Window I at Notified Price and Window II at a premium above it - letting linkage consumers procure up to 100 per cent of their PLF requirement.
44 private entities have been notified as Accredited Prospecting Agencies, removing the need for a prospecting licence.
Coal in India historically moved through two channels. Captive blocks were allotted to companies for their own end use - the system the Supreme Court cancelled in 2014 for arbitrariness, which is why 'allotment to auction' is the reform's foundational shift. The other channel is linkage: a long-term supply commitment from Coal India Limited to a power plant or industrial user at a government-set Notified Price. Under the simplified SHAKTI policy, linkage now comes through Window I at that Notified Price and Window II at a premium above it, with existing consumers able to secure up to their full Plant Load Factor requirement - PLF being the ratio of a plant's actual generation to its maximum possible generation, so 100 per cent PLF linkage means coal for running flat out. The revenue-share model changed what the government earns: instead of a fixed per-tonne payment, the bidder offers a percentage of revenue, so the exchequer's take rises and falls with coal prices - which requires a credible price benchmark, and that is what the National Coal Index provides. Notifying coking coal as a Critical and Strategic Mineral under the MMDR Act matters for a different reason: coking coal is essential to steelmaking through the blast furnace route and India imports most of what it uses, so the designation accelerates environment and forest clearances for domestic projects.
Simple Analogy: Allotment was giving out plots by application; auction with revenue share is renting them out for a share of whatever the tenant earns.
Open coal mining to any bidder with no end-use restriction.
Key: Opened 2020; no technical or financial eligibility conditions; 100 per cent FDI under the automatic route.
Provide a transparent, market-linked price benchmark.
Key: Underpins the percentage revenue-share auction model.
Sell all non-linkage Coal India coal through a single window.
Key: Removes market distortions and enhances fair competition among buyers.
Provide auction-based linkages without end-use restrictions.
Key: Under the Non-Regulated Sector Linkage Auction Policy, allowing flexibility for self-consumption, coal washing or export.
Speed up mine operationalisation through a unified clearance portal.
Key: Consolidates environment, forest and related approvals.
Bring private operational capability into coal mining.
Key: Closed and abandoned mines also offered under a revenue-sharing model to maximise resource extraction.
Expand exploration capacity beyond government agencies.
Key: 44 private entities notified, removing the need for a prospecting licence; the Geological Reports approval mechanism has also been simplified.
The parent statute for mineral regulation, under which coking coal has now been notified as a Critical and Strategic Mineral - a designation that expedites environment and forest clearance for coking coal projects.
Amended to empower coal company boards to grant Mine Opening Permissions, devolving a decision that previously required higher approval.
Now accepted as an instrument for furnishing Performance Security in Coal Block Development and Production Agreements, reducing the working capital a bidder must lock up.
GS Paper 3 > Economy: Infrastructure, Energy; Investment Models; Environment: Clearances
General Awareness > Economy and Current Affairs
General Awareness > Indian Economy and Industry
General Awareness > Economy
Coal sector reform, commercial mining and critical minerals appear regularly in UPSC GS-3 and in Banking economy sections.
Coal mining opened in 2020 with no restriction on the sale or end-use of coal and 100 per cent FDI under the automatic route.
The price benchmark enabling transparent, market-linked pricing under the revenue-share auction model.
A long-term coal supply commitment from Coal India to a consumer, allocated under the SHAKTI policy at Notified Price or a premium above it.
The ratio of a plant's actual generation to its maximum possible generation; linkage consumers may procure up to 100 per cent PLF requirement.
The window under the Non-Regulated Sector Linkage Auction Policy providing auction-based linkages without end-use restrictions.
A private entity notified to carry out exploration without a prospecting licence; 44 have been notified.
Mine Developer and Operator model bringing private operational capability into coal mining, including at closed and abandoned mines.