India’s Coal Imports Pivot Toward Steel: Metallurgical Demand Surges in FY2025-26

NEW DELHI: India’s energy and industrial import landscape is experiencing a profound structural transformation, transitioning from a power-centric procurement model to a heavily steel-centric framework. According to a comprehensive market report by the Multi Commodity Exchange (MCX), India's total coal imports stood at approximately 244.2 million tonnes in FY2025-26, remaining largely flat compared to 245.3 million tonnes in the preceding financial year. However, beneath these headline stability figures lies a dramatic pivot in the underlying composition of the import basket, driven primarily by the booming domestic steel manufacturing sector.

A closer examination of the data reveals that while aggregate import volumes held steady, the demand dynamics for specific grades diverged sharply. Coking coal imports registered a robust double-digit growth of 12.4 percent year-on-year, surging to 63.7 million tonnes from 56.6 million tonnes. Concurrently, imports of pulverised coal injection (PCI) experienced a healthy 6.2 percent uptick, climbing to 20.9 million tonnes compared to 19.6 million tonnes in the previous fiscal cycle. This combined expansion pushed India’s total metallurgical coal imports to a substantial 84.5 million tonnes in FY2025-26—marking an impressive 10.4 percent increase from the 76.3 million tonnes recorded a year earlier. Industry analysts point out that this sustained upward trajectory is intrinsically linked to the aggressive capacity expansions undertaken by Indian steelmakers, who require high-grade raw materials that domestic mines are currently unable to supply in adequate quantities.

Conversely, the thermal coal segment witnessed a notable contraction. Non-coking coal imports declined by 5.5 percent year-on-year, dropping from 169 million tonnes to 159.7 million tonnes. This reduction underscores a significant policy and operational milestone: India is successfully ramping up domestic thermal coal production, leading to improved domestic availability and a subsequent tapering of reliance on overseas thermal shipments. Consequently, the MCX report highlights that India's overall coal import vulnerabilities are decoupling from electricity generation cycles and becoming increasingly sensitive to steel production metrics. Incremental import demand is now heavily concentrated in metallurgical segments, where quality benchmarks remain a stringent bottleneck for domestic reserves.

This evolving demand matrix has simultaneously triggered strategic realignments in India’s international supplier mix. Russia has rapidly cemented its position as one of India's fastest-growing coal trade partners in FY2025-26, with total shipments expanding by 13.1 percent year-on-year to reach 32 million tonnes, up from 28.3 million tonnes. Russian coking coal supplies grew by 12.1 percent to 9.2 million tonnes, while non-coking coal imports from Russia surged by an impressive 20 percent to 7.5 million tonnes, demonstrating Moscow's deepening footprint across both industrial and power sectors.

Meanwhile, Australia maintained its traditional dominance as India's primary source for premium coking coal. Overall Australian coal exports to India grew by 9.3 percent to 43 million tonnes, anchored by a 13.4 percent rise in coking coal shipments to 34.3 million tonnes. As India balances its energy security with aggressive industrial growth, the nation's coal procurement strategy is evolving into a highly diversified, steel-reliant framework, setting the tone for future bilateral trade pacts and commodity market trends.

"The structural shift in India's coal import basket toward metallurgical grades is a clear macroeconomic indicator of the country's robust industrial expansion, particularly within the steel manufacturing sector. As domestic thermal coal production successfully mitigates power-sector dependencies, future import expenditures will be increasingly dictated by heavy industry demands rather than electricity generation cycles. For global commodity exporters, this creates a distinct strategic imperative: aligning supply chains with high-grade metallurgical requirements. At StartupLanes, we closely monitor these foundational shifts, as they directly influence capital allocation, logistics, and ancillary industrial startups supporting the manufacturing ecosystem. India’s manufacturing prowess is scaling rapidly, and the supply chain infrastructure must adapt swiftly to sustain this heavy-industry momentum over the next decade." — Dr. Shishir Gupta, Founder & CEO, StartupLanes