Government introduces Coal SETU window for long lasting coal linkages and exports

The government in a major boost towards the coal diversification has approved a new policy mechanism called the Coal SETU window for long-term coal linkages across diverse industrial users and for exports. This Coal SETU window is going to be added to the existing Non-Regulated Sector (NRS) Linkage Auction Policy of 2016 and unlike the linkages that are reserved for specified end-use sectors such as cement, sponge iron, aluminium, steel and captive power plants, the new mechanism will allow any domestic industrial consumer to participate in auctions. Coking coal will not be offered under this window, and traders will not be permitted to bid.

The policy revision shows evolving market needs and ensures ease of doing business. With the expansion of the scope of coal linkages, it is expected to smooth rising demand and emphasis on utilising domestic reserve to support the industries that were previously outside the specified end-user categories.

The existing NRS auctions for designated sub-sectors will continue and the end-users may also participate in the new window, which offers greater flexibility in how coal is used. Under CoalSETU, linkage holders may use coal for their own consumption, washing, or export, but resale within India will be prohibited. Export is allowed for up to 50 per cent of the allocated quantity, and companies can distribute coal among their group entities as per operational needs.

The Government expects the move to encourage the growth of washery operators, increasing the supply of washed coal, an area where domestic availability has lagged behind demand. Better availability is expected to reduce imports and also open opportunities for export of washed coal.

The Coal SETU window is the latest in a series of reforms aimed at opening up the coal sector, following earlier steps that allowed commercial mining without end-use restrictions.