India to Ramp Up Coking Coal Imports from US Under Bilateral Trade Deal
In a strategic move to bolster its energy partnership and secure raw materials for its expanding industrial base, India is set to significantly increase imports of coking coal from the United States. This development comes as part of a newly sealed bilateral trade agreement between the two nations, according to sources familiar with the matter.
Strengthening Energy Ties Through Coal Trade
India, despite possessing the world's fourth-largest coal reserves, faces a critical shortage of high-quality coking coal essential for steel and cement production. This has made the country heavily import-dependent, currently sourcing approximately 85% of its coking coal requirements from international markets. The new trade arrangement with the United States represents a deliberate effort to diversify these imports and reduce reliance on traditional suppliers.
India stands as the largest global buyer of US coal, with coking or metallurgical coal accounting for more than 40% of the total 20 million tonnes imported from the United States during the 2024-25 fiscal year. Data from India's coal ministry reveals that while Australia remains the primary supplier with 24.58 million tonnes in FY25, the United States has emerged as the second-largest source, providing 8.48 million tonnes, followed by Russia, Singapore, and Mozambique.
Driving Forces Behind the Import Expansion
The push for increased US coking coal imports aligns directly with India's ambitious plans to expand its domestic steel manufacturing capacity. Currently the world's second-largest steel producer with approximately 205 million tonnes per annum capacity, the government aims to elevate this to 300 million tonnes by 2030-31 and ultimately reach 500 million tonnes by 2047.
"India is import-dependent for coking coal, and diversification is needed for its sourcing," explained one anonymous source. "Imports from the US have been increasing recently and will continue to grow. While thermal coal is also imported from the US, coking coal will receive further emphasis as India builds up its domestic coal stocks for thermal usage."
During the current financial year (FY26), the United States has already supplied 6.04 million tonnes of coking coal as of November, indicating the upward trajectory of this trade relationship.
Trade Agreement Details and Industry Perspectives
The bilateral trade deal was finalized following a phone conversation between Prime Minister Narendra Modi and US President Donald Trump on February 2. As part of this agreement, the United States has committed to reducing reciprocal tariffs on India from 25% to 18% and eliminating additional duties previously imposed due to India's purchases of Russian oil.
Rajamani Krishnamurti, President of the Indian Stainless Steel Development Association, emphasized the strategic importance of this development: "The consideration to scale up coking coal imports from the US is a pragmatic move rooted in supply security rather than substitution. With domestic coking coal constraints and aggressive steel capacity expansion underway, diversifying sourcing beyond Australia reduces concentration risk and strengthens resilience."
He further noted that "the US partnership fits well into India's long-term energy strategy, balancing reliability, quality, and geopolitics, while ensuring that growth ambitions in steel are not constrained by raw material bottlenecks."
Quality Considerations and Economic Implications
While the diversification strategy offers clear supply security benefits, industry experts have raised concerns about potential cost implications. A.S. Firoz, former chief economist at the steel ministry's economic research unit, cautioned that "sourcing the mineral from the US would be costlier, including elevated freight expenses."
Firoz added that "US coking coal has relatively higher sulphur and phosphorus content compared to premium grades from Australia," noting that these impurities can affect steel quality by making it more brittle. He emphasized that unless US coal prices remain competitive, Indian steelmakers could face increased production costs.
Vinayak Vipul, Partner at EY-Parthenon India, highlighted the operational benefits: "Increasing supplies from the US helps diversify sourcing away from heavy reliance on Australia, reducing exposure to supply disruptions and extreme price volatility. The shift toward higher contribution of US coking coal facilitates enhanced blending flexibility for Indian coke makers, leveraging the differing volatility and impurity profiles."
Government Recognition and Future Outlook
The timing of this import expansion coincides with India's recent designation of coking coal as a critical mineral, underscoring its strategic importance to the nation's industrial development. During the Indian Energy Week event, Vikram Dev Dutt, Secretary in the Ministry of Coal, acknowledged the potential for increased coal imports from the United States as India pursues its steel manufacturing capacity goals.
While the coal ministry, commerce ministry, and external affairs ministry have not officially commented on the specific import increase, a US embassy spokesperson referenced President Trump's February 2 announcement that "India committed to buy over $500 billion of US products, including coal."
This development represents a significant evolution in India-US trade relations, creating a more diversified and resilient supply chain for one of India's most crucial industrial inputs while simultaneously strengthening bilateral economic ties between the two nations.
