India to set up Coal Exchange

Coal Exchange is expected to be the only trading platform for organised sale of coal in India. 

Created On: Jun 8, 2020 14:11 IST
India's coal exchange
India's coal exchange

India will soon be setting up a coal trading platform as it gears up to bring in commercial mining in the coal sector. Under the proposal, the entire coal produced in the country will be traded on a platform called ‘Coal Exchange’.

Coal Exchange will be an online coal trading platform where the pricing will be determined in a transparent manner on the basis of demand and supply. 

Significance 

The setting up of India’s first coal trading platform is significant as it paves the way for the entry of multiple buyers and sellers in the coal sector. The coal ministry is likely to start auctions for commercial coal mining on June 11. 

Key Highlights 

•  The Coal Exchange will be set up after the government addresses all the concerns related to the coal sector. 

•  Till now, the government had a monopoly on coal mining which is why, despite having abundant coal, India still imported coal. 

•  The government has now decided to allow liberalised entries in the sector so India will soon have more sellers in the market besides Coal India.

•  The Government has already allotted coal blocks to state PSUs for the sale of coal. 

•  Despite opening up the coal sector for market forces, Coal India Ltd is expected to remain a dominant player in the sector with its production target of one billion tonnes by 2024.

•  The government is also expecting to have multiple buyers of coal along with multiple sellers.

•  Hence, a platform like coal exchange similar to commodity exchange will facilitate better trading of coal. 

•  Coal Exchange is expected to be the only trading platform for organised sale of coal in India. 

Background

Union Finance Minister Nirmala Sitharam had announced reforms in the coal sector while revealing the fourth tranche of the Aatmanirbhar Bharat economic package. Under the reforms, she informed that the government plans to bring in commercial mining in coal sector on a revenue sharing basis.

The Finance Minister had announced that Government monopoly in the sector will be removed and liberalised entries will be allowed to enable more participation by people. She informed that India, despite having the third largest valuable deposit of coal, still imported coal and sometimes energy sectors suffer because of this. Hence, the government decided to bring regulation in the sector. 

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