Coal India has mined enough coal to be able to meet the needs of power plants for the next 40 days, Coal Secretary Anil Swarup said, a comfortable stocks position for a country used to summer blackouts and large imports of the fuel.
On top of the state-run company's pit-head stocks of about 40 million tonnes, India's 100 main thermal plants have 20 days of coal on hand ahead of the June-September monsoon season, when power demand peaks and coal output drops due to flooded mines.
Around this time last year, the plants had just 11 days of stocks, prompting some experts to say electricity generation may not be growing as fast as it should in the country where one in four people still goes without power.
Power generation fell 1 percent in April, after growing by 8.4 percent in the fiscal year that ended in March - the fastest rate in 20 years.
But demand is estimated to have jumped sharply in the past few weeks due to a searing heatwave that has killed 2,500 people, mainly in southern India. Swarup said Coal India was ready to raise fuel supplies.
"Coal production is increasing substantially and that would help bring down imports quite substantially, which will be reflected in the coming few months," Swarup said, adding Coal India's April-May output grew by 12 percent from the same period of last year to 82.6 million tonnes.
Swarup gave no forecast of coal import levels but said some firms may continue to buy from overseas clients based on long-term contracts.
Online commodities market operator mjunction, however, forecast India's imports this June-September will be around the level of 80.1 million tonnes bought in the year-ago period.
"But the recent depreciation in the rupee versus the U.S. dollar, and less-than-encouraging demand for cement and steel, might have its impact on power demand and in turn on coal demand, including imported coal," mjunction Chief Executive and Managing Director Viresh Oberoi said in an email.
India's total coal imports rose 12 percent to 20.8 million tonnes in May, according to provisional data from mjunction.
Though India's coal output is rising, transport facilities have not improved as fast. Swarup said the number of wagons at Coal India's disposal rose 10 percent in April-May.
Below-normal monsoon rains as forecast by the government on Tuesday could put further pressure on the railways by raising demand for coal, as the generation of hydroelectric power that accounts for about one fifth of the country's total would fall.