International Joint Ventures and Merger & Acquisitions

Indian Government to Lease Out Decoaled Land

June 28, 2022

The Government of India to lease out de-coaled land. Lets understand the benefits of this initiative & opportunities for businesses.

In a recent development, the private sector has been allowed to take mined out or de-coaled land on lease from Coal India and other state-owned entities for development of coal and energy-related infrastructure. As of now, over 3,000 hectares of such land is available in India. The acquisition will be carried out under the ambit of the Coal Bearing Areas (Acquisition & Development) Act, 1957 popularly known as the CBA Act. The CBA Act provides for the acquisition of land containing or likely to contain coal deposits and for matters connected therewith.

This decision is an extension of a move in February 2018 when the Cabinet cleared the path for commercial coal mining for the private sector, which has been touted as the most significant and ambitious reform in the coal sector since its nationalization in 1973. Most of this unlocked land is in coal mining dominated areas.

Why are decoaled land being leased out?

  • One of the key reasons highlighted by the Government for this step is the likelihood of mined out/de-coaled land falling to unauthorized encroachment; and the resources spent in maintenance and security of these lands.
  • However, the private players will not become “owners” of the land; it will only be leased out to them. The state-owned companies will remain the owners of the land.
  • These lands are no longer economically viable for mining activities and, hence, such a decision has been taken. The step also seeks to uphold the Government’s flagship policy and motto of “Aatmanirbhar Bharat” by creating useful coal and energy infrastructure.
  • Additionally, the lands will be considered for activities such as setting up washeries, coal gasification and coal-to-chemical plants.

Benefits of the policy

  • Employment: Under the policy, establishment of coal and other energy-related infrastructure without the transfer of ownership of state-run companies would lead to increased direct and indirect employment opportunities, especially in local areas where such projects may be set up.
  • Cost of Operations: In partnership with the private sector, state companies like Coal India can collaborate and set up infrastructure for alternate sources of energy such as solar and thermal plants on its own land and perform this by entering into different types of business models for each project with the objective of enhancing cost efficiency.
  • Displacement & Support: Such lands could adhere to the demands of displaced people who always wish to stay as close to their original places as possible, when displaced for such projects. This can help garner local support for new energy projects as well.
  • Prevent Acquisition of land & Displacement: Re-use of these lands for such purposes will prevent any fresh acquisition of land and related displacement promoting local manufacturing and industries.

Business Opportunities for Private Players

  • Various energy infrastructural projects would encourage investment into untapped and backward areas of the country. The “Atmanirbhar Bharat” goal will gain steam, especially in the energy development sector. Alternate sources of energy are urgent due to coal’s harmful environment impact. Thus, setting up solar, hydro and wind energy projects, amongst others, will expedite India’s climate goal of phasing out coal and using alternate sources of energy. This will also ensure that dependence on imports is reduced significantly, while job creation naturally rises.
  • The lands have been proposed to be used for constructing railway sidings and conveyor systems. This will positively impact transportation of coal and other resources – improving supply chains across the country. Currently, India is in the midst of a coal crisis due to higher than usual power consumption owing to severe heatwaves in several parts of the country. Most of this crisis stems from the fact that the supply of coal is inadequate to the regions that need it the most; production is often not the main issue. In light of the same, infrastructure for alternate sources of energy is also crucial to meet the high power demand.


All in all, the policy decision to lease out mined out/de-coaled land is positive as it ensures that usable land does not completely go to waste. The involvement of private players and their collaboration with the state machinery will ensure that energy and transportation infrastructure is improved, creating jobs, ensuring rehabilitation, and deterring further acquisition of land for such projects.

Due to climate change commitments and global warming, India will inevitably have to phase out coal. Thus, the policy can compensate for coal, which is known to be a toxic fuel – even though it is essential in a developing country like India. This decision should reduce India’s dependence on imports and until the country reaches a point where it can safely manage without coal, putting such land to use for better supply and transportation facilities and infrastructure projects is a great initiative.

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