India’s thermal coal imports rose by 58% in last decade, while import bill shot up by 124%: Report

If India focuses on expanding RE capacity by 33 GW, it would save about $826 million annually

As a developing nation, India’s power demand rests majorly on coal. With rising temperatures, especially heatwaves during summer, the power demand peaks during the months of April to June. 

A significant portion of coal needed to meet this demand is met by importing coal, which was to the tune of $21 billion in 2023-24, according to a new report by the think tank Climate Risk Horizons. This import bill was for 20% of India’s thermal coal requirements. 

The report found that the spiking demand during summer months during April to June 2024 led to India importing 2.65 million tonnes of extra thermal coal monthly, compared to non-summer months. This led to the production of roughly 4.8 billion units of electricity monthly.

According to the report, despite the national push for renewable energy, India’s reliance on imported coal and the money spent on it have been steadily increasing over the last decade, especially during the summer months. 

Renewables are a cheaper alternative

If renewables energy had to meet this rising power demand, India would need to install 33 GW of new renewable energy. If India were to install this additional capacity, it would save around $826 million every year on thermal coal imports during these months, according to the report.

“Recent disruptions in international trade underscore the risks associated with importing such a large proportion of our energy via coal. India’s energy security requires weaning the country off imported thermal coal, and the most cost-effective way to do that is by boosting our RE deployment,” said Vishnu Teja, author of the report.

Between 2013-2023, the volume of India’s thermal coal imports rose by 58%, while the money spent on it increased by 124%, due to volatile coal prices and the rupee’s depreciation, according to the report. 

Instead, if India were to install 50 GW of renewable energy every year, then thermal imports would not be necessary by the end of 2029, according to the report. This would save roughly $66 billion at current prices in forex between 2025 and 2029.

“India will have about 80 GW of solar cell manufacturing and 175 GW of module manufacturing capacity by 2026, putting the country in a position to indigenise our energy transition and phase out coal imports. However, even if domestic production falls short, a one-time import of solar components that then generate power for 25 years is still economically superior to importing coal on a continuous basis,” said Ashish Fernandes, CEO of Climate Risk Horizons. “If energy security and reduced forex outflows are the goal, boosting RE deployment to 50 GW annually is imperative.”

The report found that while coal is necessary to meet current power demands, India also needs to reduce its coal import dependency by fast-tracking renewable energy expansion for a more energy secure future.

About The Author

Editorial Team

A team of handpicked and dedicated writers committed to fact check each climate-related statement. Go to the roots and intent of each policy implemented, internationally and at home to help you understand climate better

See author's posts