Cabinet clears CoalSETU policy to allow flexible, long-term coal linkages

The Union Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved a new policy titled Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU).

Under the policy, a new CoalSETU window will be created within the existing Non-Regulated Sector (NRS) Coal Linkage Auction Policy, 2016, allowing coal linkages to be allocated through auctions on a long-term basis for any industrial use and export, without end-use restrictions.

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However, coking coal will not be offered under this window, the Cabinet Committee on Economic Affairs (CCEA) said in a statement.

The move is aimed at improving ease of doing business, ensuring faster and more flexible utilisation of domestic coal reserves, and reducing India’s dependence on imported coal to meet its energy requirements.

The policy aligns with the Government’s broader coal sector reforms, including the opening of commercial coal mining without end-use restrictions.

At present, coal linkages under the NRS policy are auctioned for specified end-user sectors such as cement, steel (coking), sponge iron, aluminium, and other industries, excluding fertiliser (urea), along with their captive power plants.

These allocations are tied to specific end uses. The newly approved CoalSETU window removes such restrictions, allowing any domestic coal consumer to participate in the auction process. Traders, however, will not be permitted to take part.

The existing system of coal linkage auctions for specified end-user sectors under the NRS policy will continue alongside the new window. Eligible end-user industries under the current policy will also be allowed to participate in CoalSETU auctions.

Coal allocated under the CoalSETU window may be used for own consumption, coal washing, or export, but resale within the country will not be permitted.

Linkage holders will be allowed to export up to 50% of their allocated coal and may flexibly utilise the coal across their group companies.

The policy also provides a boost to coal washeries, with linkages expected to increase the availability of washed coal in the domestic market, reduce imports, and open up export opportunities for value-added coal products.

CoalSETU policy is expected to promote efficient utilisation of coal, support industrial growth, and strengthen India’s energy security.