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At a staggering INR 2.31 lakh crore or nearly USD 28 billion at the exchange rate, India imported 131.92 million tonnes (mt) of coal during the first half of the current fiscal year, which is the greatest amount so far in dollar terms since FY19.

The crisis between Russia and Ukraine, which has driven global coal costs, and the weakening of the rupee versus the US dollar were the main causes of the high import value. India imported 208.93 mt of coal worth INR 2.29 lakh crore throughout the entire FY22, according to market experts.

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To put things into perspective, India imported a record 248.54 mt of dry fuel in FY20, for a total of INR 1.53 lakh crore.

In comparison to H1 FY22, when the average landed price of imported coal was INR 12,211.59 per tonne, H1 FY23 saw an increase of 58% to INR 19,324.79 per tonne.

The average price of imported coal in H1 FY23 went up a staggering 211 percent from the landed price of INR 6,215.32 per tonne during the Covid-impacted FY21.

Coking coal and high-grade coal are major imports for India and are necessary since domestic production is constrained by either limited reserves or non-availability. Coking coal and high-grade coal are often more expensive than thermal coal.

Indian coal is typically used by power plants and has a lower calorific value. Domestic coal's average notified price (ex-mine) in the first half of FY23 was INR 2,662.97 per tonne, down from INR 2,306.53 per tonne and INR 2,206.97 per tonne in FY22 and FY21, respectively.

Since November 2021, the price of South African thermal coal, a benchmark for the industry, has been rising, and since the start of FY23, the geopolitical tensions between Russia and Ukraine have generated considerable price volatility.

The global benchmark price had surpassed its all-time high in April 2022, when it was approximately USD 300 per tonne, and had risen to USD 329 in July 2022 before settling at USD 321 per tonne in September 2022 as of July 2022.

Due to lower domestic supplies and increased demand for energy during the summer peak demand period, the power sector's imports of coal increased during the current fiscal year. In comparison to the sector's overall import of 27 MT in FY22, the import of the important commodity during the April through October period of FY23 was 38.84 MT.

Consumers may import coal from whatever supplier they want in accordance with their contractual prices with payment of the relevant duty since coal is held under an Open General License (OGL).

During the previous three fiscal years, the customs charge on coal imports was 2.5%; this was changed for a brief time on May 22, 2022, exempting coal import duty. With effect from November 19, the exemption of import duty on coal was once more abrogated. Currently, the basic customs duty (BCD) of 15% and the agriculture infrastructure & development cess of 1% each must be paid while importing the coal.

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As per Procurement Resource, India imported 131.92 million tonnes (mt) of coal for the first half of the current fiscal year, which is the highest amount so far in dollars since FY19, at a whopping INR 2.31 lakh crore or about USD 28 billion at the exchange rate.

The major contributors to the high import value were the conflict between Russia and Ukraine, which has increased the price of coal globally, and the depreciation of the rupee against the US dollar. Market analysts estimate that India imported 208.93 mt of coal valued at INR 2.29 lakh crore for the full FY22.