FICCI Welcomes Cabinet Approval Of Commercial Mining Of Coal
FICCI welcomes Cabinet approval to introduce commercial mining of coal and sees it as a landmark policy decision that will change the face of Indian Coal Sector by ushering in the rebalancing of prices and market dynamics riding on efficient and large-scale mining.
FICCI considers it as an enabling measure to concurrently reinforce 'Make in India' initiative and attract foreign capital to boost productivity while progressively reducing dependence on coal imports. A defining measure will be to create a policy framework that will enable international participation and make the coal sector subject to competition and efficient pricing.
FICCI also welcomes the proposal of ascending forward auction as a means to maximise the value of a scarce resource like coal and consequent redistribution of wealth.
FICCI had pioneered the concept of commercial mining of coal, suggesting a binding framework for auctioning of mining leases and market construct on the lines of a Clearing House for transparent price discovery. FICCI believes that the ripple effect of efficient coal mining will benefit the downstream sectors of iron and steel, cement and power in improving their market access and serving a larger cross-section of buyers as a vehicle for economic growth. For power especially, coal being the feedstock of significantly large capacities, a collateral benefit will be higher capacity utilisation and leveraging of short-term and spot markets that can be serviced by commercial coal to improve liquidity and secure new revenue streams.
Given the country's vast coal reserves and potential for scientific exploitation in un-mineralised areas, commercial mining entrusted to specialised agencies under a competitive bidding framework holds out the promise of accelerating the pace of mineralisation, scaling up domestic coal production and strengthening India's market-based economy.