Coal India Ltd unions, protesting against a move to open up the industry to private firms, called off a five-day strike on its second day on Wednesday after a meeting with the coal and power minister, staving off a looming power crisis.
The company accounts for about 80 per cent of India's total output and strikes have previously crippled power plants, hampering government efforts to reform the coal industry. Coal fuels 60 per cent of the country's power production.
Coal India struggled to produce and ship less than half of its daily target on Tuesday, the first day of the strike, threatening to exacerbate a shortage of the fuel.
A union leader said they decided to end the strike late on Wednesday after minister Piyush Goyal agreed to form a committee to look into any issues with a recently passed executive order, which would allow private companies to mine and sell the fuel for the first time in 42 years.
"We have withdrawn the strike," said Jibon Roy, general secretary of the All India Coal Workers Federation. "The minister agreed to form a committee... They will see what are the problems in the ordinance (executive order). Normal discussions on other demands will continue."
Coal Secretary Anil Swarup confirmed the strike was called off.
Known for its industry-lagging productivity, Coal India has fallen short of its output targets for the last six years, making the country the third-largest coal importer despite sitting on the world's fourth-largest reserves of the fuel.
Prime Minister Narendra Modi's ministers have said that increasing competition is key to ending India's power shortage. But miners fear this will lead to pay and job cuts at Coal India, which has come to be seen as an exemplar for deep-rooted inefficiency in state enterprise.
Coal India digs out about 1,100 tonnes of coal per employee a year, compared with 36,700 tonnes per employee at U.S.-based Peabody Energy and 12,700 tonnes per employee at China's Shenhua Energy, according to industry body Assocham in New Delhi.
It produced 645,000 tonnes on Tuesday, less than half of its usual daily output at this time of year, mainly using contract workers, a company official told Reuters.
It dispatched about 800,000 tonnes from new output and stocks from railway sidings, another official said.
Coal India has a permanent workforce of 286,196, excluding supervisors and executives, and also employs about 65,000 contract workers.