Indian Government waives upfront payment, offers rebates instead to expedite underground coal mining

A loader loads coal in the truck at an open cast coal field. File
| Photo Credit: Reuters

In a bid to speed up the operationalisation of underground coal blocks, the government on Thursday (April 24, 2025) announced new incentives like waiving off of the upfront payment.

The push for underground coal mining aligns with the country’s drive for sustainable coal production.

“In a decisive step towards revitalising India’s coal sector, the Ministry of Coal has introduced a series of transformative policy measures aimed at promoting underground coal mining,” an official statement said.

These reforms address the challenges of high capital investment and longer gestation period.

“The floor percentage of revenue share for underground coal mines has been reduced from 4% to 2%. This targeted reduction offers substantial fiscal relief and enhances the financial viability of underground projects,” the statement said.

The mandatory upfront payment requirement for underground mining ventures has been completely waived. This measure removes a financial barrier, encouraging broader participation from the private sector and facilitating faster project implementation.

These incentives are further complemented by an existing 50% rebate on performance security for underground coal blocks, collectively lowering the entry threshold and facilitating smoother project implementation.

Underground coal mining is more environment-friendly, as it causes significantly less surface disruption compared to opencast mining. These policy measures are expected to encourage the adoption of advanced technologies — such as continuous miners, longwall systems, remote sensing tools, and AI-based safety mechanisms — which will boost productivity while ensuring ecological balance.