India needs stricter coal allocation implementation for fair treatment to power generators with adequate inventories
Industry analysts are calling for stricter coal allocation policies in India to prevent power plants that maintain adequate inventories from being penalized. The current system risks diverting emergency supplies to inefficient plants, potentially undermining the stability of the national power grid.
Why it matters
Efficient coal management is critical for India's energy security as thermal power continues to account for nearly 70% of the country's electricity supply.
Power generators that have consistently maintained coal inventories in line with prescribed norms risk being indirectly penalised as emergency supplies are diverted to plants that have failed to maintain adequate stocks, industry analysts and officials said.
India’s coal-allocation framework is designed to provide thermal power generators with greater certainty over fuel supplies and enable them to plan inventories. The revised SHAKTI Policy, approved by the Central Government in May 2025, streamlined coal-linkage allocation into two windows.
Under Window I, central generating companies and states receive coal linkages at notified prices. Window II allows eligible producers, including imported-coal-based plants, to procure coal through auctions at a premium over the notified price.
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