Procedure established till now in Coal Mining

  • Until now there were restrictions on who could bid for coal mines only those in power, iron and steel and coal washery business could bid for mines and the bidders needed prior experience of mining in India.
  • This effectively limited the potential bidders to a select circle of players and thus limited the value that the government could extract from the bidding.
  • Second, end-use restrictions inhibited the development of a domestic market for coal.
  • The ordinance essentially democratises the coal industry and makes it attractive for merchant mining companies, including multinationals such as BHP and Rio Tinto, to look at India.
  • The move was overdue considering that the country spent a huge Rs.1,71,000 crore in coal imports last year to buy 235 million tonnes; of that, 100 million tonnes was not substitutable, as the grade was not available in India.
  • But the balance 135 million tonnes could have been substituted by domestic production had it been available.