India has recently shifted to the mining regime. Commercial coal mining allows the private sector to mine coal commercially without placing any end-use restrictions. Under this, coal mining blocks are granted through a competitive bidding process. Now, 100% foreign direct investment (FDI) through automatic rule is allowed in coal mining activities, including associated processing infrastructure. Associated processing infrastructure includes washery and facilities for crushing and coal handling
Benefits from commercial coal mining:

• Reducing India’s dependence on import: India meets a fifth of its annual requirement of coal through imports. Commercial coal mining is expected to reduce this bill by at least 1/3rd.\
• Modernizing the coal sector: New mining majors will set new benchmarks in terms of mechanization, automation, mining practices etc.
• Development of states: The entire revenue from the auction of coal mines would accrue to the coal bearing states. This will incentivize them to utilize the revenue accrued for the growth and development of backward areas.
  • In captive coal mining, companies were not required to pay royalty to states as mined coal was meant for their own end use.
• Enhancing the productivity of the coal sector: Opening the sector to private players and foreign investments will end the monopoly of Coal India Limited and bring in competition. Also, earlier captive coal mining entities had no incentive to enhance their production beyond their own needs.
• Development of aspirational districts: Most of the mines auctioned under new norms are in aspirational districts. These mines would create employment as well as other economic opportunities in the area.

Challenges associated:

• Broad eligibility criteria: As the new regime is allowing those who have no previous mining experience, they may turn out to be non-serious bidder who may use coal mines as assets to leverage in the market without any intention of actually mining them as happened during 2000s.
• Overexploitation of resources: As under the new regime there is no restriction of end use, it might lead to more and more coal mining for profit in a shorter period of time.
• Concerns of state governments: States like Jharkhand are raising concerns that the new regime will lead to destruction of vital forest cover and its tribal communities will be displaced.
• Deep pockets and risk management capabilities are needed: After winning the coal auction, rehabilitation and resettlement needs to be managed. Very few firms in India today have the financial and risk management capabilities to go through all of this.

To make the new commercial coal regime a success, few steps such as addressing the concerns of the state regarding their revenue share, enacting sustainable coal mining code for removing overlapping jurisdictions of multiple bodies etc. need to be taken.