India paid a record $28 bn for importing 131.92 mt coal in H1 FY23

India imported 131.92 million tonnes (mt) of coal during the first half of the current financial year at a whopping ₹2.31 lakh crore, or roughly $28 billion at Wednesday’s exchange rate, the highest so far in value terms since FY19.

The high value of imports was on account of surging international coal prices largely due to the Russia-Ukraine conflict and a weakening rupee against the US dollar.

According to the data provided by Coal Minister Pralhad Joshi in a written response to a query in Rajya Sabha, India imported 208.93 mt of coal worth ₹2.29 lakh crore in the entire FY22. For comparison, India imported a record 248.54 mt of the dry fuel during FY20, which was worth ₹1.53 lakh crore.

The average landed price of imported coal during H1 FY23 was 58 per cent higher at ₹19,324.79 per tonne than the landed price of ₹12,211.59 a tonne in FY22.

Compared to the landed price of ₹6,215.32 a tonne during the Covid-impacted FY21, the average price of imported coal in H1 FY23 was higher by a whopping 211 per cent.

India largely imports coking coal and high grade (GCV) coal which are essential as domestic production is limited due to either scarce reserves or non-availability. Prices of coking coal and high grade coal are normally higher than thermal coal.

Indian coal is largely of lower calorific value and is generally used by power plants. The average notified price (ex-colliery) of domestic coal during H1 FY23 stood at ₹2,662.97 per tonne, as compared to ₹2,306.53 a tonne and ₹2,206.97 a tonne in FY22 and FY21, respectively.

Coal prices

As per CareEdge, coal prices of South African thermal coal, a global benchmark, have been on an upward trajectory since November 2021 and the geopolitical tensions between Russia and Ukraine have caused significant price fluctuations since the beginning of FY23.

As of July 2022, the global benchmark had crossed its all-time high price of around $300 per tonne in April 2022 and had reached $329 in July 2022, before settling at $321 per tonne in September 2022.

Power sector imports

The power sector coal imports rose in the current fiscal due to lesser supply from domestic sources and higher demand for electricity during the peak demand summer season. As against the total import of 27 MT by the sector in FY22, the import of the key commodity during April-October period of FY23 stood at 38.84 MT.

Coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty.

Customs duty on coal imports during the last three fiscal years stood at 2.5 per cent, which was revised for a short duration with effect from May 22, 2022 exempting import duty on coal. However, exemption of import duty on coal was again withdrawn with effect from November 19. Presently the customs duty applicable on importing coal is 1 per cent Basic Customs Duty (BCD) and 1.5 per cent of Agriculture Infrastructure & Development Cess (AIDC).



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