Cabinet Approves CoalSETU Window for Fair Coal Access and Efficient Resource Use

The Union Cabinet Committee on Economic Affairs has approved a major new policy called CoalSETU to bring more transparency, fairness, and efficiency to India’s coal allocation system. The policy introduces a new “CoalSETU window” in the existing NRS (Non-Regulated Sector) Linkage Policy. It aims to make coal available for any industrial use and export through a long-term auction mechanism.

What Is It?

• A separate auction window is being added to the NRS Linkage Auction Policy of 2016.
• Through the CoalSETU window, any domestic buyer requiring coal can participate in the auction for long-term linkages.
• However, coking coal will not be offered under this window.
• The policy removes earlier restrictions on end-use categories.
• This means industries are no longer limited to specific sectors, and coal can be used for a wider range of industrial activities or even exported.

Background

• The existing NRS Linkage Policy provides coal linkages to sectors like cement, sponge iron, steel (coking), aluminium, and their captive power plants, all based on auctions.
• These linkages were earlier limited to specified end users.
• With changes in the coal market and the need for smoother business processes, the government recognised the importance of offering more flexibility.
• Since commercial mining already allows companies to mine coal without end-use restrictions, the linkage policy is now being updated to match this openness.

Key Features of the CoalSETU Window

Several important features define the new policy,

• Coal linkages will be allocated on a long-term auction basis.
• Any industrial consumer can participate, but traders are not allowed.
• Coking coal will not be available under this window.
• Existing specified end-user sub-sectors may also participate.
• Coal can be used for own consumption, export, coal washing, or other approved uses, but cannot be resold within India.
• Coal linkage holders may export up to 50% of their allotted quantity.
• Group companies may flexibly share the coal obtained under this window.

These features aim to make the coal sector more open, transparent, and efficient.

Context and Need for the Policy

India’s growing energy demand and industrial expansion make efficient coal utilisation essential. Many industries depend heavily on imported coal due to limited domestic supply under previous restrictions. With CoalSETU, the government aims to,

• Expand the user base for domestic coal
• Reduce import dependence
• Improve ease of doing business
• Accelerate utilisation of existing coal reserves
• Align linkage policies with commercial mining reforms

This change is expected to create a more level playing field and support industries that need regular coal supplies.

Key Takeaways

• Cabinet approves CoalSETU, a new window in the NRS Linkage Policy.
• Allows long-term coal linkages through auction for any industrial use and exports.
• Coking coal excluded; traders cannot participate.
• Linkage holders can export up to 50% of their coal.
• Existing end-user sectors can also join the new window.