Coal India sees first sales increase in six months, driven by summer demand and gas shortage

Coal India’s sales in March increased for the first time in six months, according to the company’s statement on Wednesday. This uptick comes as India prepares for peak summer electricity demand, at a time when global natural gas supply chains are under severe strain due to the ongoing US-Israeli conflict with Iran. The conflict has disrupted critical shipping routes and gas exports from the region, leading to shortages and volatility in international gas markets. As a result, India is ramping up domestic coal stocks to compensate for reduced gas availability, underscoring the country’s dependence on coal for energy security during periods of global instability. 

The term offtake refers to the volume of coal actually sold to customers, rather than simply produced. In March, Coal India’s offtake rose by 0.7% to 69.5 million tons, even as provisional output dropped by 1.5% to 84.5 million tons, as reported in a stock exchange filing. The state-run company is responsible for over 80% of India’s coal production, making it the world’s largest coal miner by output. 

Prior to this growth, Coal India’s offtake had declined for six straight months following a 7.6% surge in August. This decline led to higher inventory levels at power plants, as milder weather in 2025 reduced electricity demand. Despite the approach of the peak summer season, these ample coal stocks have kept demand for coal imports low, according to Vasudev Pamnani, director at Gujarat-based coal trader iEnergy Natural Resources. 

Pamnani noted that domestic coal remains more attractive in certain market segments. He explained that disruptions in liquefied natural gas (LNG) supply—directly linked to the global conflict—and declines in gas-based power generation are expected to further increase India’s reliance on coal. Power generation refers to the process of producing electricity, and in India, coal-fired plants are the mainstay for this purpose. 

India generates nearly 75% of its electricity from coal and is expected to turn even more to this fuel during the current gas shortage. Although gas accounts for only about 2% of India’s total power generation, the country utilises approximately 8 to 10 gigawatts (GW) of gas-fired power during peak demand or heatwaves. For context, one GW is enough to supply electricity to roughly 700,000 homes, highlighting the importance of even a small share of gas in meeting surges in demand. 

In response to the gas shortage, India has instructed its coal-fired power plants to operate at maximum capacity and avoid planned maintenance shutdowns. Additionally, industries have been asked to use captive generation—that is, producing their own electricity in dedicated plants for internal use—to help free up more grid power for households. 

With weather forecasts predicting a hotter-than-average summer and an increase in heatwave days during May, India’s electricity needs are set to rise sharply. This will likely intensify the country’s reliance on coal as a primary energy source. 

The current situation highlights broader challenges for India’s energy policy. While coal offers immediate energy security and helps avoid blackouts during supply disruptions, increased coal use raises serious environmental concerns, particularly around air pollution and carbon emissions. Economically, higher domestic coal consumption may reduce import costs in the short term, but it also delays the transition to cleaner energy sources. As India faces hotter summers and ongoing global energy market volatility, policymakers must balance the need for reliable electricity with commitments to reduce emissions and address climate change. The coming months will test India’s ability to navigate these competing priorities and shape the future of its energy landscape.