India blocks firms from China, other neighbours in commercial coal auction

India will restrict its neighbours from joining commercial coal auctions, said the government as New Delhi and Beijing negotiate to end a border standoff in eastern Ladakh.

The Centre had allowed 100 per cent foreign direct investment (FDI) under the automatic route for coal mining, including associated processing infrastructure. The coal ministry issued on Monday a press note citing an amendment made to the FDI Policy in April that restricted entry of countries with which India shares its borders.

The move is part of India’s efforts to restrict entry of Chinese players in the Indian infrastructure projects amidst heightened tension between the two countries. Chinese companies were last month barred from participating in bids for Indian government procurement without approval from relevant authorities on the ground of defence and national security.

Chinese mining companies such as China Shenhua or China Coal Energy are in the top 10 of the largest coal miners of the world.

The Centre launched the auction of coalmines for commercial mining and sale by private companies in June. The bidding terms were liberalised to attract foreign players, non-mining companies and large mining companies. The Centre in May 2020 amended the Coal Mines Special Provisions Act, 2015 to simplify the auction process and attract significant investor interest.

Pralhad Joshi, union minister for coal in a recent statement said, “100 per cent FDI is the biggest reform of our times. The entry of international players will create an efficient and competitive coal market in India.”

The coal ministry has started the proceedings for commercial coal mining auction with 41 coal blocks. The 41 mines are estimated to cumulatively earn the mine-bearing states Rs 20,000 crore revenue annually. The last date for sale of tender document is August 14 and bid submission due date is August 18. However, a notice dated July 30 said the ministry of coal is considering the request of investors to extend the deadlines.