India plans to triple coal stocks at power plants to avert summer shortages

India has set an ambitious target of increasing coal inventories at power stations to at least 55 million tonnes by the end of the current financial year in March, as the government moves to prevent electricity shortages next summer. The plan requires coal miners and Indian Railways to step up production, dispatches and transportation, although prioritising power plants could intensify supply constraints for other industries.

The coal, power and railways ministries have jointly drawn up the target, seeking to raise stocks from their current level of around 18 million tonnes. The proposed inventory would broadly match the reserves held at power plants at the same time this year, according to people familiar with the discussions.

Coal India Ltd, the country's largest coal producer, and the ministries of power and railways did not immediately respond to requests for comment.

Coal shortage puts pressure on power supply

The coal crunch has affected several parts of the economy in recent months, contributing to power cuts and higher energy costs. Weak hydropower generation and heat-related electricity demand have added to the pressure on the power grid. Meanwhile, Coal India's focus on supplying power stations has left factories and other industrial consumers struggling to secure adequate fuel.

Coal inventories have begun recovering gradually as temperatures have fallen over the past two weeks. However, stocks remain close to a five-year low, providing power plants with supplies for only around six days. This leaves the electricity system vulnerable to disruptions, including those caused by Cyclone Arnab last month, and complicates preparations for the next summer.

The government generally expects power stations to maintain around three weeks of coal supplies, although the requirement varies depending on their location. Nearly half of the country's power plants are currently classified as having critical stocks, meaning their inventories are below 25% of the prescribed requirement.

The government is also keen to avoid electricity shortages ahead of assembly elections in several key states during the first half of next year. Uttar Pradesh, the country's most populous state and a politically significant battleground, is among the states scheduled to vote.

Coal India and Railways step up operations

Coal India and Indian Railways have increased their efforts to meet the March deadline. Coal India's shipments reached a record level last month, surpassing the previous all-time high recorded in March. More than four-fifths of the coal dispatched went to power stations supplying electricity to the grid. The company also reported its highest-ever coal production for an October.

Railway capacity for transporting coal has also increased. Indian Railways provided 20% more carriages in October than it did during the corresponding month last year. The power ministry wants the number to rise by a further 7% by March, according to people familiar with the discussions.

The railways ministry separately reported that coal loading by the national transporter had reached an all-time high in October up to the 18th, registering a 22.5% increase over the corresponding period last year. It said an average of 430 coal rakes a day had been dispatched to thermal power plants during the first half of the 2026-27 financial year, a 7.1% rise from the same period a year earlier.

The coal ministry had also reported in October that supplies to the power sector had improved, with average daily deliveries rising to 2.49 million tonnes during the first 10 days of the month, compared with 2.21 million tonnes in September. Railway loading for the power sector averaged 469 rakes a day during that period, against 426 in September.

Industries struggle as power plants get priority

Improved coal supplies, alongside lower electricity demand as temperatures ease, have helped stabilise power availability in areas such as Chhattisgarh. Industries in the state had experienced power cuts last month.

However, the priority given to electricity-generating plants has created difficulties for other coal consumers, particularly businesses that operate their own power stations.

Companies with captive power plants are waiting for months to receive coal under their existing contracts. As a result, they have been forced to purchase fuel at higher prices through spot auctions or buy electricity from the grid, according to Rajiv Agarwal, secretary general of the Indian Captive Power Producers Association.

Agarwal warned that the situation could deteriorate further as smog intensifies in northern India, potentially affecting railway movement and coal deliveries.

“In the coming weeks, as the smog gets worse, it will disrupt railway traffic and we expect supplies to tighten further,” he said.

The newsprint industry has also reported only a marginal improvement in coal availability for its operations. Vijay Kumar, secretary general of the Indian Newsprint Manufacturers Association, said manufacturers of paper used for newspapers continued to face difficulties securing adequate supplies.

Kumar wrote to Prime Minister Narendra Modi last month seeking his “urgent intervention” to ease the shortage. He urged the government to reduce the quantity of coal allocated to power plants to make more fuel available to other industries.

The government's challenge, therefore, is not limited to rebuilding power station inventories before the summer peak. It must also ensure that efforts to protect electricity generation do not leave other coal-dependent businesses facing prolonged shortages and higher operating costs.