India steps up domestic coal supply as Indonesian exports face competition

India’s coal sector continues to attract strong private sector interest as the government accelerates efforts to boost domestic production, a trend that is already weighing on import demand and intensifying competition for Indonesian coal exporters.

In the 14th round of commercial coal block auctions, India’s Ministry of Coal said on December 24 that it received 49 bids from 11 companies for 24 out of 41 coal blocks offered. The participation included several first-time bidders, underscoring sustained industry interest in India’s commercial coal mining framework and policy reforms aimed at expanding domestic supply.

India has steadily liberalised its coal mining sector in recent years, opening commercial mining to private players to reduce supply bottlenecks and strengthen energy security. The strong response in the latest auction round reflects expectations that coal will remain a key pillar of India’s energy mix, even as renewable capacity expands.

For Indonesian coal producers and traders, the push to lift domestic output reinforces a longer-term risk to export demand from one of Indonesia’s largest thermal coal markets. The impact is already visible in recent trade data.

Read also : India thermal coal imports fall 4% in Apr–Nov as Indonesian shipments drop

India’s thermal coal imports fell 4% year on year to 112 million tonnes in April–November 2025, down from 117 million tonnes a year earlier, according to data from commodities intelligence firm BigMint. The decline was driven mainly by weaker shipments from Indonesia, India’s largest supplier of non-coking coal.

Imports of Indonesian thermal coal dropped nearly 10% during the eight-month period to 65.9 million tonnes, reflecting softer demand from coal-fired power plants amid ample domestic supply, elevated inventories and competitive pricing from alternative suppliers. Coal-fired power generation in India fell 5.5% year on year during the period, as higher output from hydropower and renewables reduced reliance on coal.

Although Indian non-coking coal imports rebounded month on month in November, supported by increased arrivals from Russia and the United States, shipments from Indonesia continued to face pressure. Russia and the US benefited from aggressive pricing and supply dislocations, while South African coal gained share in the sponge iron segment, where demand remained firm.

Market observers note that India’s efforts to boost domestic coal production are being reinforced by broader policy measures, including expanded coal linkage schemes, export allowances for surplus coal and new auction mechanisms under the CoalSETU framework. Together, these initiatives are expected to strengthen domestic supply and gradually curb import dependence.

Looking ahead, BigMint expects India’s thermal coal imports to continue trending lower in FY2026, particularly during the winter months when domestic production typically peaks. While intermittent demand from sponge iron producers may offer some support, rising domestic output is likely to further limit imports from Indonesia.

The outcome of the latest auction round underscores renewed momentum in India’s coal sector, with implications for regional supply balances, pricing dynamics and the outlook for Indonesian coal exports heading into 2026.

Editing by Reiner Simanjuntak