A new global energy report presents a nuanced picture of India's coal future, forecasting a significant rise in overall consumption even as its dominance in the power sector begins to wane. According to the International Energy Agency's (IEA) Coal 2025: Analysis and Forecast to 2030 report, India's total coal demand is set to increase by 17% over the next five years, reaching 1,522 million tonnes (MT) by the decade's end. However, coal's share in the country's electricity generation mix is projected to decline from over 70% in 2025 to about 60% by 2030.
Power Sector Shift: Renewables Gain, Coal's Share Dips
The IEA notes a pivotal shift occurring in 2025, with India's total coal consumption expected to see a marginal year-on-year decline of 1.2%. This dip is primarily driven by a 3% drop in coal-fired power generation. Several factors converged to create this trend: a strong monsoon led to higher hydropower output, lower electricity demand for cooling reduced pressure on thermal plants, and the continued rapid expansion of renewable energy capacity provided cleaner alternatives.
Despite this, coal remains the bedrock of India's electricity system. In 2025, coal use for power generation is estimated at around 940 MT, accounting for nearly 72% of total coal consumption of 1,297 MT. The country's installed power capacity stood at 495 GW in August 2025, comprising 253 GW of coal-fired capacity, 123 GW of solar, 52 GW of wind, and 42 GW of hydropower.
The government's push for 500 GW of non-fossil capacity by 2030 continues unabated. Madhura Joshi, programme lead for global clean power diplomacy at E3G, highlighted that India has made remarkable progress on renewables, with 2025 poised to be a record-breaking year. "The decline in coal demand alongside rapid renewable growth signals positive momentum for India’s energy transition," she stated.
Industrial Demand Emerges as New Growth Engine
While the power sector's reliance on coal moderates, a different story is unfolding in industry. The IEA report identifies non-power coal demand as the main source of growth in 2025. This surge is fueled by robust infrastructure activity and steady expansion in key sectors like cement and steel.
India, as the world's second-largest cement market, is expected to see cement demand grow by 5%–6% in 2025, with elevated levels sustained over the medium term. Capacity expansion by major producers, rising steel output—particularly through coal-based direct reduced iron (DRI) routes—and new coal gasification projects are reinforcing coal's critical role in industrial growth. This underscores the continued importance of both thermal and metallurgical coal for the economy.
Consequently, India's non-power coal consumption is projected to reach 356 MT in 2025 and rise further to 470 MT by 2030.
Production Rises, Imports Targeted
Supporting this demand trajectory, India's domestic coal production hit an all-time high of 1,082 MT in 2024, marking a 7% increase. The IEA noted that production growth outpaced demand growth by two percentage points, a strategic move aimed at cutting coal imports, strengthening energy security, and avoiding supply shortages and price spikes.
Paradoxically, even as it builds renewable capacity at a record pace, India also commissioned or began trial operations at 20 new coal-fired power plants totalling 14 GW in 2025, with more capacity under construction. This reflects a strategy focused on ensuring base-load power security to support economic growth.
Globally, China remains the dominant force in coal markets, consuming about 30% more coal than the rest of the world combined. For India, the path forward involves a complex balancing act—managing increased industrial coal use, reducing reliance on coal for power, and accelerating the clean energy transition to meet its development, growth, and climate goals simultaneously.
