The government is "strongly considering" to allow commercial coal mining by private companies in a bid to bridge the demand-supply gap, Coal Minister Sriprakash Jaiswal said Monday.
"We are strongly considering to allow commercial coal mining by private firms," Jaiswal told reporters here.
Currently, the government allows only state-run firms such as Coal India Ltd to mine for commercial use, while private companies are allowed to mine only for captive consumption.
Officials said letting private firms to mine coal would boost India's coal output and reduce dependence on imports.
India produces over 450 million tonnes of coal annually.
Former power secretary V.S. Sampath had said in March that the country would have to import 35 million tonnes of coal in 2009-10 to run its power utilities.
The government is expected to spell out reforms in the mining sector in the 2009-10 budget, slated to be presented July 6 in the Lok Sabha.
President Pratibha Patil during her address to a joint session of parliament June 9 had indicated reforms in the sector.
The coal ministry is likely to introduce the Coal Nationalisation (Amendment) Bill, 2000, in the coming budget session, which would allow private companies to participate in the mining.
The bill was earlier introduced in parliament during the National Democratic Alliance (NDA) government's tenure.
The government will likely seek an amendment to the bill to permit competitive bidding of captive coal blocks. This proposal has already been cleared by the cabinet.