India’s coal sector is set for a transformative leap as the Ministry of Coal has introduced a strategic package of incentives to boost underground coal mining. These reforms mark a significant shift in policy, aimed at overcoming long-standing hurdles such as high capital requirements and extended project timelines.

A key highlight of the policy shift is the reduction in the floor revenue share for underground mines from four percent to two percent, providing critical financial relief to stakeholders. Additionally, the complete waiver of the mandatory upfront payment further lowers the financial threshold for entry, opening doors for greater private sector participation and quicker operationalisation of mining projects.

These initiatives build upon the existing incentive of a 50 percent rebate on performance security, forming a comprehensive framework to enhance the financial viability of underground coal ventures. The policy package reflects a deliberate effort to rebalance the energy landscape by encouraging cleaner and safer extraction methods over traditional surface mining.