The Union Cabinet Committee on Economic Affairs (CCEA) has approved a major reform called CoalSETU, introducing a new auction-based linkage window to bring transparency, fairness, and efficiency to India’s coal allocation system.
The CoalSETU window is an addition to the existing Non-Regulated Sector (NRS) Linkage Policy, 2016, allowing long-term coal linkages for any industrial use or export — a significant move to liberalise the coal sector and reduce import dependence.
Cabinet Approves CoalSETU Window for Auction-Based Coal Linkages
What Is CoalSETU?
CoalSETU (Coal Sector Efficiency, Transparency, and Utilisation) is a new policy framework that enables any domestic industrial buyer to participate in coal auctions without being restricted by end-use category.
Key Highlights:
- A separate auction window added to the NRS Linkage Policy (2016)
- Allows any industrial user to bid for long-term coal linkages
- Coking coal is excluded from this window
- Removes earlier end-use restrictions (previously limited to cement, sponge iron, aluminium, etc.)
- Enables coal use for any industrial activity or export
This reform aims to align coal linkage rules with commercial mining policies, ensuring greater flexibility and transparency in coal allocation.
Background
Earlier, the NRS Linkage Policy (2016) allowed coal linkages only for specified sectors like:
- Cement
- Sponge Iron
- Aluminium
- Steel (non-coking)
- Captive Power Plants
However, as India’s energy market evolved, the government recognised the need for a more flexible and open system.
With commercial mining already allowing coal extraction without end-use restrictions, CoalSETU ensures that linkage-based coal buyers also enjoy similar benefits.
Key Features of the CoalSETU Window
| Feature | Details |
|---|---|
| Type of Coal | Non-coking coal only |
| Allocation Mode | Long-term auction-based linkages |
| Eligible Participants | Any industrial consumer (except traders) |
| Usage Rights | Own use, export, coal washing, or other approved purposes |
| Export Limit | Up to 50% of allotted quantity |
| Resale in India | Not permitted |
| Group Company Sharing | Allowed between subsidiaries or group entities |
| Existing Sectors’ Participation | Existing end-users under NRS policy can also bid |
These features are designed to improve transparency, optimise coal usage, and create a level playing field for industries dependent on coal.
Context and Need for the Policy
India is one of the world’s largest coal consumers, with growing demand driven by industrialisation and energy needs.
Many industries still rely on imported coal due to allocation limits and sectoral restrictions under older policies.
CoalSETU aims to:
- Expand access to domestic coal for all industries
- Reduce dependence on imports
- Improve utilisation of India’s coal reserves
- Strengthen ease of doing business
- Support Aatmanirbhar Bharat in the energy sector
By introducing open auctions and flexible usage norms, the policy is expected to modernise India’s coal supply framework and encourage responsible, market-driven utilisation.
Expected Outcomes
- Broader industrial participation in coal auctions
- Efficient use of domestic coal reserves
- Reduction in logistics bottlenecks
- Increased transparency in allocation
- Boost to exports and industrial competitiveness
This reform marks a strategic shift toward open, technology-driven coal governance, aligning India’s domestic coal linkage system with global standards of efficiency and transparency.
Exam-Oriented Key Facts
- Policy Name: CoalSETU
- Approved By: Cabinet Committee on Economic Affairs (CCEA)
- Year of Approval: 2025
- Purpose: Auction-based long-term coal linkages for industrial use and export
- Linked Policy: NRS (Non-Regulated Sector) Linkage Policy, 2016
- Exclusion: Coking coal not included
- Eligible Participants: Industrial consumers (not traders)
- Export Limit: Up to 50% of allotted quantity
- Key Objectives: Transparency, efficiency, industrial growth, import reduction
- Supports Initiative: Aatmanirbhar Bharat, Ease of Doing Business
Question & Answer
Q1. What is the main purpose of the newly approved CoalSETU policy?
(a) To promote renewable energy use
(b) To auction long-term coal linkages for industrial use and exports
(c) To import coking coal for the steel industry
(d) To privatise coal mines
Answer: To auction long-term coal linkages for industrial use and exports
Q2. Under which existing policy has the CoalSETU window been introduced?
(a) Commercial Mining Policy 2020
(b) National Mineral Policy 2019
(c) NRS Linkage Policy 2016
(d) Coal Mines Act 2015
Answer: NRS Linkage Policy 2016
Q3. What type of coal is excluded from the CoalSETU window?
(a) Thermal coal
(b) Coking coal
(c) Non-coking coal
(d) Lignite
Answer: Coking coal
Q4. What is the maximum percentage of coal linkage quantity that can be exported under CoalSETU?
(a) 25%
(b) 50%
(c) 60%
(d) 75%
Answer: 50%
Q5. Which entities are not allowed to participate in CoalSETU auctions?
(a) Industrial consumers
(b) Traders
(c) Existing NRS sector companies
(d) Captive power producers
Answer: Traders
Q6. Which key government committee approved the CoalSETU policy?
(a) Cabinet Committee on Security
(b) Cabinet Committee on Economic Affairs (CCEA)
(c) Ministry of Coal Advisory Council
(d) NITI Aayog Executive Committee
Answer: Cabinet Committee on Economic Affairs (CCEA)
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