Commercial exploitation of coal in India began in 1774 with John Sumner and Suetonius Grant Heatly of the East India Company in the Raniganj Coalfield along the Western bank of Damodar river. The growth of Indian coal mining remained slow for nearly a century due to low demand. The introduction of steam locomotives in 1853 boosted demand, and coal production rose to an annual average of 1 million metric tons (1.1 million short tons). India produced 6.12 million metric tons (6.75 million short tons) of coal per year by 1900 and 18 million metric tons (20 million short tons) per year by 1920. Coal production received another boost during the First World War due to increased demand, slumped again in the early 1930s. Production reached a level of 29 million metric tons (32 million short tons) by 1942 and 30 million metric tons (33 million short tons) by 1946.
In the regions of British India known as Bengal, Bihar and Orissa, the Kutch Gurjar Kshatriyas pioneered Indian involvement in coal mining from 1894. They broke the previous monopolies held by British and other Europeans, establishing many collieries at locations such as Khas Jharia, Jamadoba, Balihari, Tisra, Katrasgarh, Kailudih, Kusunda, Govindpur, Sijua, Sijhua, Loyabad, Dhansar, Bhuli, Bermo, Mugma, Chasnala-Bokaro, Bugatdih, Putki, Chirkunda, Bhowrah, Sinidih, Kendwadih, and Dumka.
Seth Khora Ramji Chawda of Sinugra was the first Indian to break the British monopoly in the Jharia Coalfields. Natwarlal Devram Jethwa says that
The East Indian Railway in 1894-95 extended its line from Barakar to Dhanbad via Katras and Jharia. Messrs. Khora Ramji in 1894 was working on railway lines contract of Jharia branch line and with his brother Jetha Lira was also building Jharia Railway Station, when he discovered coal in Jharia belt. The location of his three collieries named Jeenagora, Khas Jherria, Gareria is mentioned also in 1917 Gazetteers of Bengal, Assam, Bihar and Orissa.
Other Indian communities followed the example of the KGK in the Dhanbad-Jharia-Bokaro fields after the 1930s. These included the Punjabis, Kutchis, Marwaris, Gujaratis, Bengalis and Hindustanis. Encyclopaedia of Bengal, Bihar and Orissa -1920 mentions:- "Out of 92 collieries belonging to Gujaratis in Jharia Coalfields Area during 1920s - 50 belonged to Mistris of Kutch with Seth Khora Ramji as Head of them all." Seth Khora Ramji of Sinugra was also honored by King of Kutch by giving him a Paghdi.
Following independence, the Government of India introduced several 5-year development plans. Annual production rose to 33 million metric tons (36 million short tons) at the beginning of the First Five Year Plan. The National Coal Development Corporation (NCDC), a Government of India Undertaking, was established in 1956 with the collieries owned by the railways. The NCDC aimed to increase coal production efficiently by systematic and scientific development of the coal industry. The Singareni Collieries Company Ltd. (SCCL) which was already in operation since 1945 and which became a Government company under the control of Government of Andhra Pradesh in 1956. The coal industry in India was thus controlled by state-owned companies in the 1950s. Today, SCCL is a joint undertaking of Government of Telangana and Government of India sharing its equity in 51:49 ratio.
Right from its genesis, the commercial coal mining in modern times in India has been dictated by the needs of the domestic consumption. India has abundant domestic reserves of coal. Most of these are in the states of Jharkhand, Odisha, West Bengal, Bihar, Chhattisgarh, Telangana and Madhya Pradesh. On account of the growing needs of the steel industry, a thrust had to be given on systematic exploitation of coking coal reserves in Jharia coalfield. Adequate capital investment to meet the burgeoning energy needs of the country was not forthcoming from the private coal mine owners.
Unscientific mining practices adopted by some of them and poor working conditions of labor in some of the private coal mines became matters of concern for the Government. On account of these reasons, the Central Government took a decision to nationalize the private coal mines. The nationalization was done in two phases, the first with the coking coal mines in 1971-72 and then with the non-coking coal mines in 1973. In October, 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971 provided for taking over in public interest of the management of coking coal mines and coke oven plants pending nationalization. This was followed by the Coking Coal Mines (Nationalization) Act, 1972 under which the coking coal mines and the coke oven plants other than those with the Tata Iron & Steel Company Limited and Indian Iron & Steel Company Limited, were nationalized on May 1, 1972 and brought under the Bharat Coking Coal Limited (BCCL), a new Central Government Undertaking. Another enactment, namely the Coal Mines (Taking Over of Management) Act, 1973, extended the right of the Government of India to take over the management of the coking and non-coking coal mines in seven States including the coking coal mines taken over in 1971. This was followed by the nationalization of all these mines on May 1, 1973 with the enactment of the Coal Mines (Nationalization) Act, 1973 which now is the piece of Central legislation determining the eligibility of coal mining in India.
All non-coking coal mines were nationalized in 1973 and placed under Coal Mines Authority of India. In 1975, Eastern Coalfields Limited, a subsidiary of Coal India Limited, was formed. It took over all the earlier private collieries in Raniganj Coalfield. Raniganj Coalfield covers an area of 443.50 square kilometres (171.24 sq mi) and has total coal reserves of 8,552.85 million metric tons (9,427.90 million short tons). Eastern Coalfields puts the reserves at 29.72 billion metric tons (32.76 billion short tons). That makes it the second largest coalfield in the country (in terms of reserves).
The North East Indian states enjoys special privileges under constitution of India. The Sixth Schedule of constitution and article 371 of constitution allows state governments to formulate its own policy in order to recognize customary tribal laws. For example, Nagaland has its own coal policy which allows its natives to mine coal from their respective lands. Similarly, coal mining in Meghalaya was rampant till imposition of ban on coal mining by National Green Tribunal. The Nagaland Coal and Meghalaya Coal has large buyers in North India, Central India and Eastern India.
India has the fifth largest coal reserves in the world. As on 31 March 2015, India had 306.6 billion metric tons (338.0 billion short tons) of the resource. The known reserves of coal rose 1.67% over the previous year, with the discovery of an estimated 5.04 billion metric tons (5.56 billion short tons). The estimated total reserves of lignite coal as on 31 March 2015 was 43.25 billion metric tons (47.67 billion short tons). The energy derived from coal in India is about twice that of the energy derived from oil, whereas worldwide, energy derived from coal is about 30% less than energy derived from oil.
Coal deposits are primarily found in eastern and south-central India. Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Telangana and Maharashtra accounted for 99.08% of the total known coal reserves in India. As on 31 March 2015, Jharkhand and Odisha had the largest coal deposits of 26.44% and 24.72% respectively.
The following table shows the estimated coal reserves in India by state as on 1 April 2014.
The production of coal was 612.44 million metric tons (675.10 million short tons) in 2014-15, a growth of 8.25% over the previous year. The production of lignite was 48.26 million metric tons (53.20 million short tons) in 2014-15, 9% higher than the previous fiscal. India is ranked 4th in world coal production.
The top producing states are:Odisha - see Talcher in Angul district
Other notable coal-mining areas include:Singareni collieries in Khammam district, Telangana
Jharia mines in Dhanbad district, Jharkhand
Nagpur & Chandrapur district, Maharashtra
Raniganj in Bardhaman district, West Bengal
Neyveli lignite mines in Cuddalore district, Tamil Nadu
Singrauli Coalfield and Umaria Coalfield in Madhya Pradesh
Industries in India consumed an estimated 827.57 MT of coal in 2014-15. The two largest consumers of coal in India are electricity generation and steel industries. Consumption of lignite stood at 49.57 MT in 2014-15. Electricity generation alone accounts for 89.09% of the total lignite consumption.
As on 31 October, the installed capacity of coal power in India was 186,492.88 MW, accounting for 60.7% of the total installed capacity. India's electricity sector consumed about 72% of the coal produced in the country in 2013.
A large part of Indian coal reserve is similar to Gondwana coal. It is of low calorific value and high ash content. The carbon content is low in India's coal, and toxic trace element concentrations are negligible. The natural fuel value of Indian coal is poor. On average, the Indian power plants using India's coal supply consume about 0.7 kg of coal to generate a kWh, whereas United States thermal power plants consume about 0.45 kg of coal per kWh. This is because of the difference in the quality of the coal, as measured by the Gross Calorific Value (GCV). On average, Indian coal has a GCV of about 4500 Kcal/kg, whereas the quality elsewhere in the world is much better; for example, in Australia, the GCV is 6500 Kcal/kg approximately. India imported nearly 95 Mtoe of steam coal and coking coal which is 29% of total consumption to meet the demand in electricity, cement and steel production.
The state-owned coal mines of Bihar (now Jharkhand after the division of Bihar state) were among the first areas in India to see the emergence of a sophisticated mafia, beginning with the mining town of Dhanbad. It is alleged that the coal industry's trade union leadership forms the upper echelon of this arrangement and employs caste allegiances to maintain its power. Pilferage and sale of coal on the black market, inflated or fictitious supply expenses, falsified worker contracts and the expropriation and leasing-out of government land have allegedly become routine. A parallel economy has developed with a significant fraction of the local population employed by the mafia in manually transporting the stolen coal for long distances over unpaved roads to illegal mafia warehouses and points of sale.
The coal mafia has had a negative effect on Indian industry, with coal supplies and quality varying erratically. Higher quality coal is sometimes selectively diverted, and missing coal is replaced with stones and boulders in railway cargo wagons. A human corpse has been discovered in a sealed coal wagon.
In June 2012, the Bollywood epic Gangs of Wasseypur was released portraying the coal mafia in the area of Dhanbad. The movie received overwhelming response and was declared a hit. Another Bollywood movie Gunday was also loosely based upon coal mafia.