India coal demand stabilizes as rising output curbs import growth

By Dominikus

India’s coal demand is stabilizing as rising domestic production and record-high inventories reduce reliance on imports, reshaping trade flows for major exporters, an industry official said.

India’s total coal demand stood at about 1.28 billion tonnes in 2025, broadly unchanged from a year earlier, while domestic production rose to approximately 1.04 billion tonnes, according to Captain Ravi Shukla, general manager at Bulk Marine, speaking at an industry conference on March 18.

Coal imports declined by around 1% year-on-year to 264.6 million tonnes in 2025, reflecting improved domestic supply and slower demand growth across key sectors.

 “Coal continues to be the backbone of India’s energy system despite global pressures,” Shukla said.

The power sector remains the largest consumer, accounting for about 74% of total coal demand, followed by steel and sponge iron at 9%, with cement and other industries making up the remainder.

However, growth in coal-fired power generation has slowed. Output from coal-fired plants fell by around 4% in 2025, while electricity demand rose by about 2%, indicating weaker industrial activity and improved efficiency.

At the same time, coal inventories have increased significantly. Total stockpiles rose from 109 million tonnes in December 2023 to 174 million tonnes in December 2025, outpacing consumption growth and reducing the need for imports in the near term.

Read also: India’s coal imports fall 4.2% as domestic output drive gains pace

India’s import mix remains diversified, with Indonesia as the largest supplier, accounting for about 38% of total imports in 2025, followed by Australia at 16%. Additional volumes are sourced from South Africa, the United States and Russia.

Despite the recent slowdown in imports, structural factors continue to support demand for foreign coal. Domestic production is concentrated in eastern and central regions, while consumption is spread nationwide, creating logistical challenges.

In addition, the relatively low quality of domestic coal requires imports of higher-grade material for use in sectors such as steel and certain power plants.

 “Lower-grade domestic coal and logistical challenges continue to necessitate imports of higher-quality coal,” Shukla said.

For exporters, India remains an important market as demand from China weakens, although rising domestic output and high inventory levels suggest limited growth in imports in the near term.

India’s coal demand is expected to remain stable, supported by ongoing energy needs, while import dependence may gradually decline as domestic supply expands.

Editing by Alexander Ginting