India enjoys world's largest coal reserves, after US and China. Coal, the most abundant fuel resource in India, is the prime source of energy in the country. Its contribution to the industrial growth of the country can hardly be denied. In a modern & balanced energy portfolio, it's one of the most crucial & enduring elements providing low cost, secure energy solution to sustainability challenges.

Coal production is inadequate to cope with the growing demand for electricity & industrial energy. Subsidized prices of electricity, poor financial state of the utilities and unaffordable prices of coal are a few factors impeding coal supply & investment in electricity. Investment in coal supply is further impeded by distribution & control regulation over foreign investment.

India is now all set to double up its per-capita electricity consumption by the year 2011. However, for a country that relies heavily on domestic coal, the stresses due to such a drastic growth in demand are already apparent.

There has been a steady growth in the import of coal over the last decade. With coal consumers from both the power as well as industrial sectors looking for sourcing options from abroad, the import rose by 12% during this period.

Development of Indian economy will lead to a spurt in coal imports, with India fighting to secure energy for its future. FY06, Coal India is likely to produce 363 Metric tons of coal. However, current projections clearly indicate that India could face a shortfall of 80 Metric ton per year in the supply of coal by 2011.

To conclude, there're about 94Bn tons of proven coal reserves in India. At current levels of production this is sufficient for the next 230 years. However, current production levels aren't enough to meet the growing demand.

For more information on Indian coal industry you can read our report "Indian Coal Industry: Opportunities for Growth (2006) " available at http://www.rncos.com/Report/IM0371.htm.

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