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India opens nationalised coal sector to private firms

The Indian cabinet has decided to allow domestic private firms to enter the coal mining sector, Parliamentary Affairs Minister Pramod Mahajan said on Thursday.

Mahajan said the cabinet decided to amend existing laws to allow private firms to explore for and mine coal and lignite deposits.

He declined to say whether overseas firms could mine coal through their subsidiaries in India.

Mahajan said the move was aimed at reducing a widening gap between demand and supply.

"But we took precautions not to go back to the pre-nationalisation era when there was chaos."

"The amended law will prescribe conditions, locations and size of mines so that a rational, co-ordinated scientific development can be done," Mahajan said.

A previous attempt in 1995 to amend India's mining laws to open the coal sector was scotched by massive protests from trade union organisations.

India's coal industry was nationalised in 1972 amid growing complaints of labour exploitation; unsafe mining practices and wanton destruction of India's shrinking coal deposits.

India's coal reserves by an official estimate in 1998 stood at 67,260 million tonnes. Annual production figures have stagnated at around 308 million tonnes for several years with demand vastly outstripping supply.