India is exploring new ideas to mandate the blend of imported coal in its power plants. This decision comes in response to a severe reduction in coal inventories at many power plants due to logistical issues in recent months. If implemented, this action will be the first of its kind since 2024.
Current Coal Inventory Status in Power Plants
According to initial discussions, the plan to require power plants to blend a maximum of 5 percent imported coal with domestic coal is under consideration. Most power plants in India traditionally use domestic coal, and this policy has been pursued over the past two years to increase domestic production and reduce reliance on imports. However, a sudden increase in electricity demand and logistical issues in transporting coal from mines to power plants have severely reduced coal inventories at many thermal power plants.
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Growth in Electricity Demand and Its Impact on Coal Inventory
In recent weeks, the share of thermal power plants in India facing severe coal shortages has increased to nearly 40 percent of all operational power plants. For instance, 74 thermal power plants had less than three days of coal inventory on September 19 and 20, a significant increase from the previous week when the number was 60.
Despite these shortages, India is not facing serious challenges in coal supply. Domestic transportation issues, along with rising electricity demand, have led to reduced inventories at coal-fired power plants in several states. Many of these plants, which are still the largest electricity producers in the country, have reduced their coal inventories below the critical level of 25 percent.
Furthermore, given the forecasts for increased electricity demand due to strong weather conditions, India expects total coal demand this year to rise by 4.2 percent to 1.353 billion tons. This increase, in contrast to last year's slight decline, has been reported by the International Energy Agency (IEA) in its mid-2026 update.
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