India's Energy Landscape: Achieving Coal Market Independence for a Sustainable Future

India's energy landscape is undergoing a significant transformation as the nation seeks to balance economic growth with sustainability. While coal remains a dominant energy source, efforts to achieve market independence through increased domestic production and reduced imports are gaining momentum. Simultaneously, India is investing in renewable energy, green shipping initiatives, and infrastructure upgrades to transition towards a cleaner future. This market analysis explores India's evolving coal market dynamics, energy diversification strategies, and policy initiatives aimed at fostering a sustainable energy ecosystem. ‍

Coal Market Trends

In 2024, India's coal production reached a record high, driven by increased demand from utilities and a government initiative to boost domestic output. Total coal production from state-controlled entities like Coal India Limited (CIL), Singareni Collieries Company Limited (SCCL), and privately allocated mines for industrial use amounted to 1.04 billion tons, marking a 7% increase from the previous year.

CIL's production rose to 785.2 million tons in 2024, up from 756.1 million tons in 2023. In contrast, SCCL's output slightly decreased by 4% to 67.12 million tons. Notably, production from company-operated mines (captive blocks) designated for direct industrial consumption saw a significant rise, reaching approximately 187 million tons, up from 143.3 million tons the previous year.

In 2024, India’s coal import trends (image 1) revealed significant fluctuations compared to previous years, reflecting shifts in demand and domestic supply dynamics. The year started strong, with Q1 imports surpassing those of 2022 and 2023, signaling increased reliance on international coal to meet rising energy demand. This trend continued into Q2, which saw a peak in imports, although still lower than the high reached in 2022, indicating some moderation in the pace of growth. However, Q3 experienced a sharp decline, more pronounced than in previous years, aligning with India’s ongoing efforts to boost domestic coal production. This shift has reduced the country’s dependency on imports while strengthening local supply chains.

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Despite the mid-year downturn, Q4 saw a rebound, bucking the typical downward trend observed in prior years. This late-year surge in imports can likely be attributed to seasonal demand spikes or constraints in domestic production. These contrasting patterns underscore India’s evolving coal strategy, balancing increasing self-sufficiency with the continued need for flexibility in imports to meet fluctuating industrial and power sector demands. Moving forward, import trends are expected to remain dynamic, influenced by domestic production levels, policy adjustments, and global market conditions.

The data comparing Indian coal imports in 2023 and 2024 (image 2) highlights key shifts in supplier dominance and market shares. Indonesia has remained the largest coal exporter to India, increasing its share slightly from 43.0% in 2023 to 44.0% in 2024. This indicates India's continued reliance on Indonesian coal. However, Australia, the second-largest supplier, has seen a notable decline in its market share, dropping from 19.8% to 16.4%, suggesting diversification of import sources or a possible reduction in Australian coal competitiveness.

South Africa and the United States have slightly strengthened their presence in the Indian coal market. South Africa's share increased from 8.6% in 2023 to 10.7% in 2024, while the U.S. saw a marginal rise from 9.2% to 9.5%. These gains, however, come at the cost of a seemingly stable supplier—the Russian Federation, which has maintained its share at 9.3% across both years. Despite this apparent stability, Russia lost its position as the third-largest supplier in 2024, falling behind both South Africa and the United States. This suggests that while Russia’s overall volume might have remained the same, its relative importance in India’s coal imports has diminished due to higher growth in imports from other nations.

Meanwhile, Mozambique’s share slightly declined from 4.6% to 4.1%, indicating a small reduction in its coal exports to India. Canada, which contributed 1.3% in 2023, is absent from the 2024 data, while Colombia emerged as a new supplier with 0.8%. The United Arab Emirates (UAE) has seen a minor increase from 1.0% to 1.2%, reinforcing its small but consistent presence in the market.

Overall, while Indonesia remains the dominant player, India appears to be gradually adjusting its coal import sources, possibly due to economic, geopolitical, or trade-related factors. The relatively stable percentage of Russian coal imports, despite growth from other key suppliers, suggests that Russia is facing increased competition, leading to a decline in its relative ranking among India’s top coal suppliers.

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Crude Oil Dependence on Russia

India's crude oil imports from Russia have seen fluctuations in the years 2023 and 2024 (image 3). New U.S. sanctions targeting Russian oil producers and associated entities have posed challenges for Indian refiners in securing Russian oil supplies. Consequently, Indian Oil Corp anticipates a reduction in Russian oil imports for the fiscal year ending March 31, 2025. India has already been actively seeking to diversify its crude oil sources to reduce dependence on Russian supplies, especially in light of recent sanctions impacting Russian oil exports. The Indian government is expanding its pool of crude suppliers from 27 to 39 countries to ensure energy security. Indian state refiners, such as Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL), have increased spot market purchases from the Middle East and Africa to compensate for the anticipated shortfall in Russian supplies. IOC recently procured 7 million barrels of crude oil from these regions, including Abu Dhabi's Murban crude and various grades from Nigeria, Gabon, and Angola. These efforts reflect India's commitment to diversifying its energy sources and enhancing supply security amid evolving geopolitical challenges. India's long-term energy strategy includes a focus on renewable energy and reducing fossil fuel dependence. As the country continues to scale up solar, wind, and other renewable energy projects, the demand for crude oil may not see the same level of growth, further reducing the urgency for sourcing oil from specific regions, including Russia.

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Advancing Green Shipping

India is actively pursuing green shipping initiatives to align with global sustainability goals, recognising the critical need for transformation in the maritime sector. The government has set an ambitious target to transition its entire coastal and inland waterways shipping fleet to renewable energy sources within the next five years. This initiative is a key step toward achieving the country's broader environmental goals, with a focus on reaching net-zero carbon emissions by 2070.

To support this transition, India plans to establish a dedicated 250-billion-rupee ($2.9 billion) maritime development fund aimed at strengthening its shipbuilding and repair industry. This substantial investment will be instrumental in developing cleaner and more energy-efficient vessels, as well as enhancing port infrastructure to accommodate greener technologies. The fund will be financed through a strategic partnership, with the Indian government contributing 49% and the remaining funds coming from ports and private sector investments.

These initiatives not only demonstrate India's commitment to sustainable maritime practices but also reflect its broader vision of reducing the environmental footprint of the shipping sector. As part of this push, India is also exploring the adoption of alternative fuels, energy-efficient vessel designs, and cutting-edge technologies to reduce emissions. The commitment to renewable energy in maritime transport positions India as a global leader in the movement toward more sustainable shipping practices and offers an important model for other nations seeking to address the environmental impact of their maritime industries.

Actions to reduce the carbon emissions footprint

India’s commitment to reducing carbon emissions is reflected in a comprehensive, multi-pronged approach aimed at both immediate and long-term sustainability goals. A cornerstone of this strategy is the accelerated expansion of renewable energy. The nation has set a bold target of achieving 500 GW of non-fossil fuel-based energy capacity by 2030, emphasising its intent to reduce dependency on coal and other fossil fuels. India has become a global leader in solar energy production and is also expanding its wind energy capacity, which is integral to the nation’s renewable energy mix. This transition to clean energy is essential not only for reducing emissions but also for ensuring a reliable, sustainable energy supply for the future.

A key element of India’s emission reduction strategy is the promotion of green hydrogen. Through the National Hydrogen Mission, India is positioning itself to lead in the production and use of green hydrogen, which can decarbonise hard-to-abate sectors such as heavy industry, transportation, and power generation. By investing in hydrogen infrastructure and technology, India aims to become a global leader in green hydrogen by 2030, aligning with global trends in sustainable energy and tackling emissions from some of the most energy-intensive industries.

Energy efficiency also plays a central role in India’s efforts. Programs like the Perform, Achieve and Trade (PAT) scheme and the Bureau of Energy Efficiency’s Standards & Labelling initiative are designed to curb energy consumption in both the industrial and residential sectors. By reducing energy waste, these initiatives not only lower carbon emissions but also contribute to economic efficiency, fostering sustainable growth while conserving resources.

The electrification of transport is another vital pillar of India’s emissions reduction strategy. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme is accelerating the production and adoption of electric vehicles (EVs). With the transport sector being one of the largest sources of emissions globally, India’s push towards EVs is a crucial step in mitigating climate change. EV adoption not only reduces emissions from fuel consumption but also promotes cleaner, more efficient transportation systems. To complement these domestic initiatives, India is exploring market-based mechanisms like carbon pricing and emissions trading systems, which provide financial incentives for industries to reduce their carbon footprint. These tools could expedite the transition to cleaner technologies, creating a competitive environment for low-carbon solutions and encouraging innovation and investment in sustainable practices.

India’s international climate commitments further bolster its emissions reduction efforts. As part of the Paris Agreement, the country has pledged to achieve net-zero emissions by 2070 and to reduce its carbon intensity by 45% by 2030 compared to 2005 levels. These ambitious targets align with global climate goals and demonstrate India’s leadership in the international fight against climate change, ensuring that its domestic policies are consistent with global sustainability objectives.

Technological innovation is also a crucial component of India’s approach. Carbon Capture and Storage (CCS) technologies are being deployed to capture carbon emissions from heavy industries and power plants, preventing large volumes of CO2 from entering the atmosphere. India’s investment in CCS infrastructure aims to tackle emissions from sectors like steel and cement, where complete decarbonisation is difficult. These technologies provide a vital bridge toward a low-carbon future while enabling continued industrial activity.

Finally, India’s green shipping initiatives underscore its commitment to decarbonising all sectors. The government is promoting cleaner fuels, such as LNG and hydrogen, for the maritime industry. Additionally, the introduction of shore power facilities at major ports will allow vessels to connect to renewable energy sources while docked, reducing their emissions. These efforts align with global maritime sustainability goals, reinforcing India’s commitment to reducing emissions across its most energy-intensive industries.

In conclusion, India’s carbon reduction strategies are broad and ambitious, spanning multiple sectors—from energy production to transportation and industrial processes. By advancing renewable energy, green hydrogen, energy efficiency, and technological innovation, India is on track to meet its climate targets and contribute significantly to global emissions reduction. The nation’s commitment to a sustainable, low-carbon future is clear, with multifaceted solutions that address the complex challenges of climate change.

You can explore detailed trends in coal and oil flows to India from multiple origin countries annually, with in-depth insights on a weekly, monthly, and quarterly basis using the Signal Ocean Platform data. For more information, contact us at research@thesignalgroup.com.

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