Can Coal India reinvent itself fast enough to ride energy’s imminent disruption?

These steady figures project an image of stability, but obscure significant challenges to CIL’s long-term business model as India’s energy sector undergoes a transformative shift.

Beneath the surface, the rise of renewables, increasing competition from captive coal producers, and collapsing global coal prices threaten CIL’s almost total decades-long dominance, while its diversification efforts remain sluggish. 

The prevailing narrative is that coal will remain the cornerstone of India’s energy security needs for decades, with CIL as the dominant supplier.

The International Energy Agency’s Electricity 2024 report projects coal meeting 68% of India’s electricity demand by 2026. In 2021, it had forecast that coal would retain at least a 40% share of India’s electricity mix through 2040. 

India’s Economic Survey 2023-24 reinforces IEA’s latest projection, emphasising coal’s role in ensuring affordability and baseload stability. The Central Electricity Authority (CEA) plans to add 80 GW of coal-fired electricity capacity by 2032, expanding India’s total capacity to 283 GW at a cost of $80 billion.

Independent industry forecasts, such as those from Mordor Intelligence, expect India’s coal market to grow from 1.04 billion tonnes in 2025 to 1.50 billion by 2030. 

With India’s per capita electricity consumption at just 1,200 kWh—well below the global average of 3,200 kWh—coal’s role is seen as essential to meet rising demand that renewables alone cannot satisfy in the near term.

Coal India’s specific dominance is supported by structural advantages. It controls nearly 48% of India’s proven coal reserves, accounts for 80% of the country’s total coal production, and possesses an extensive logistics network—these would be prohibitively expensive for new entrants to replicate. 

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Key threats to Coal India’s dominance

• India’s rapid shift to renewables is eroding coal’s dominance in the country’s energy mix. IEA projects India’s renewable capacity to grow from 168 GW in 2023 to over 500 GW by 2030, while CEA expects coal’s share of electricity to fall from 73% in 2022-23 to 55% by 2030. 
• Plummeting lithium-ion battery costs—down 90% from $1,100/kWh in 2010 to $115/kWh in 2024—have made renewables paired with storage increasingly competitive. CEA estimates a need for 136-160 GWh of grid-scale battery storage by 2030. NITI Aayog’s estimates are higher, predicting India’s battery storage potential would reach 600 GWh by 2030, which would reduce reliance on coal for baseload power.
• The rise of captive and commercial coal production, up 28% to 197.50 million tonnes in 2024-25, is eroding Coal India’s monopoly. Enabled by the Mines and Minerals (Development and Regulation). Amendment Act, 2021, private players now hold 19% of the coal production market, up from 9% in 2019-20, with 125 auctioned mines boasting a collective capacity of 273 million tonnes annually. CIL’s 1-billion-tonne production target, delayed to 2025-26 from 2023-24, may still be missed. 
• Global thermal coal prices have crashed from $445/tonne in 2023 to ~$100. While CIL’s domestic pricing offers some insulation, e-auction premiums—a key revenue source—have plunged from as high as 60% above the standard price charged by CIL to its long-term customers in its good years, to less than 10% this year.

Operational efficiency concerns

Coal India has missed its 1-billion-tonne production target for a consecutive year, with the 781 million tonnes of coal produced in 2024-25 falling significantly short of the company’s 838 mt target, a larger variance from FY24’s 774 mt produced against the 780 mt targeted.

In FY23, Coal India had exceeded its target by 3 mt, producing 703 mt. 

Coal India’s subsidiary South Eastern Coalfields Ltd, too, has reported an 18.7% shortfall from its production target for FY25, which CIL attributed to heavy rainfall, delays in land acquisition, and pending regulatory clearances. 

Labour productivity remains below international benchmarks, with average output per man-shift for underground mines at less than 1.0 tonnes, compared with 30-40 tonnes in advanced mining regions.

Coal India’s diversification ambitions

With a commanding market share and a consolidated cash reserve of ₹253,000 crore as of 31 March, Coal India possesses both the financial headroom and operational scale to pursue diversification. 

A series of announcements show strategic intent towards transitioning beyond its traditional coal-dominated portfolio. These include:

• A joint venture with GAIL Ltd, Coal Gas India Ltd, aims to convert coal into synthetic natural gas, which is a cleaner use of coal assets.
• Plans outlined in 2020 to develop 14 rooftop and ground-mounted solar projects totalling 3 GW. Roughly ₹3,650 crore of the capital was reportedly earmarked from CIL’s own expenditure budget, with the rest expected via joint ventures—including a 2018 partnership with NLC India Ltd.
• An MoU with Damodar Valley Corp. (DVC) for a 2×800 MW ultra-supercritical thermal power plant in Jharkhand, with a total investment of ₹16,500 crore. The project will be developed under a 50:50 joint venture, with coal sourced from CIL subsidiaries Bharat Coking Coal Ltd and Central Coalfields Ltd.
• Acquisition of the Khattali Chotti graphite block in Madhya Pradesh—CIL’s first move into non-coal critical minerals mining, indicating a tentative entry into what the government has marked as a sector of crucial national importance.

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Execution challenges and strategic gaps

The scale of these announcements might be impressive, but CIL’s diversification efforts remain largely pre-operational. The initiatives often lack clarity on timelines, execution roadmaps, and revenue potential, raising questions about their seriousness and eventual impact.

For example, the Khattali Chotti graphite project is still in its nascent phase. A one-year wait for the composite licence (which combines prospecting and mining rights) will be followed by up to three additional years to secure the mining lease. In practical terms, production is unlikely to begin before 2029. 

Moreover, no plans have been announced on downstream processing or value addition, nor has there been any indication of integration with broader battery supply chains. Also missing is a cohesive critical minerals strategy involving other key inputs like lithium, cobalt, or rare earth elements.

Execution has also been a chronic weakness for Coal India. 

Between 2015 and 2023, CIL announced nearly 3 GW of renewable energy projects, but as of now, its largest operational asset is the 50 MW solar plant at Nigahi, which was commissioned in November. The NLC India JV signed in 2018 for 3 GW of solar power and 2GW thermal power assets has progressed at a glacial pace, with limited or no tangible outcomes after several years.

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Hunkering deeper on coal

Coal India’s ₹24,750 crore investment in multi-phase first mile connectivity (FMC) projects continues to advance steadily, supporting the company’s ambitious, albeit delayed, 1 billion mt production target.

The FMC projects are meant to eliminate road transportation of coal from mining areas by utilizing conveyor systems to connect directly to railway sidings, which are expected to deliver a drastic reduction in dust pollution, diesel consumption, and loading errors, while improving throughput. 

However, this substantial investment in coal infrastructure creates concerning path dependency. It embeds coal deeper into CIL’s business model and India’s energy future. With commissioning timelines extending to 2027-2029 for various project phases, these investments lock India into coal utilization well beyond 2040, potentially working against the country’s renewable energy and climate commitments. 

A narrowing window 

With its substantial cash reserves and market dominance, Coal India possesses the runway needed for transformation, but the window of opportunity is narrowing. 

The critical question facing CIL isn’t whether coal will remain a part of India’s energy future, but whether CIL can evolve from a fossil fuel producer into a diversified energy powerhouse quickly enough before market disruption and policy shifts render its core business model obsolete.