As per industry data, the country’s coal imports were 5 per cent higher during 2019-20 than the previous year and are projected to increase further as the country’s coal consumption is likely to rise in the coming years. In a move to curb imports and protect domestic producers, the government recently launched a new coal import monitoring system (CIMS). Under the new system, the government has made it mandatory for coal importers to disclose future shipments. This means importers of coking coal, steam coal and bituminous coal will have to obtain a permit ahead of deliveries. The move is expected to encourage domestic coal production and make the recently auctioned commercial coal mines viable in the country.
The monitoring system
In December 2020, the Ministry of Commerce and Industry launched the CIMS, under which a trader will have to provide advance information about imports and obtain a registration number. In this system, importers of different kinds of coal such as anthracite, bituminous and coking, and steam will have to register in advance on the CIMS, providing the necessary information.
On the CIMS, importers need to submit advance information on the import of items and obtain an automatic registration number by paying a registration fee of Rs 1 per thousand, subject to a minimum of Rs 500 and a maximum of Rs 100,000, on cost, insurance and freight (CIF) value. In addition, importers can apply for registration neither earlier than 60 days nor later than the 15th day before the expected date of arrival of the import consignment. The registration number would be valid for 75 days. Importers will also have to enter the registration number and expiry date of registration in the bill of entry to enable customs to clear consignments. The government already has an import monitoring system for a number of steel items, called steel import monitoring system (SIMS), which keeps a tab on imports and enhances domestic manufacturing.
Import trends
India’s coal import has declined by 18.6 per cent, from 143.63 million tonnes (mt) to 116.81 mt, during April-October 2020-21 as against the same period a year ago. However, the country’s coal import increased to 21.5 mt in October 2020 as against 18.28 mt in the corresponding month of the previous fiscal. Of the total imports in October 2020, non-coking coal was at 14.46 mt. During April-October 2020, non-coking coal import was at 77.67 mt as compared to 98.73 mt in the same period a year ago. Coking coal import during April-October was recorded at 23.89 mt, lower than the 28.63 mt imported during the same period a year ago.
Going forward, the central government will encourage thermal power plants (TPPs) to switch to domestic coal and reduce imports. In an order issued on November 11, 2020, the Ministry of Environment, Forest and Climate Change (MoEFCC) stated that in order to simplify the procedure for changing the source of coal and to encourage TPPs to opt for domestic coal, it has decided that all TPPs (including captive power plants) that have environmental clearance can change their coal source from imported to domestic, domestic to domestic, and domestic to imported, including lignite. This can be done directly through e-auctions as well as short-term linkage/long-term linkage/other linkage options offered by the Ministry of Coal or any organisation recognised for allotting coal linkages, without seeking an amendment in the environmental clearance.
The way forward
The CIMS will be effective from February 1, 2021. However, the facility of online registration has been available from December 31, 2020. The proposed monitoring system will allow the government to keep an updated record of import volumes, with details of specific grades. The information on imports will help the government fine-tune its policies to discourage further coal imports. Additionally, the data obtained through monitoring would enable state-controlled coal producers, including Coal India Limited (CIL), to reach out to the importer, in case the requirement can be matched from domestic sources.
Net, net, the recent move for stringent screening is aimed at increasing economic self-reliance and reducing imports.