The decision to allow 100 per cent FDI in coal mining will help bring efficiency in the sector and reduce fuel shortages in the power segment as competition will increase with foreign mining firms entering the domestic market, a finance ministry-constituted task force has said.

"The recent policy change allowing 100 per cent foreign direct investment (FDI) in coal mining is expected to provide a big thrust to foreign mining companies to enter India, bringing in their superior mining technology and increasing competition in the domestic market," the final report of the task force on National Infrastructure Pipeline (NIP) for 2020-2025 presented to the government said.

This, it said, will also help reduce dependence on imported coal, and thereby lower the import bill.

It said similar issues have impacted gas-based power plants in India, where non-availability of domestic gas and high cost of imported gas have affected the financial viability of many gas assets.

The task force further said that there is an urgent need to address the concerns emanating from poor quality and erratic supply of coal as well as the stricter emission norms to be followed by thermal power plants.

The Cabinet under the chairmanship of Prime Minister Narendra Modi had last year approved allowing 100 per cent FDI in coal mining and associated infrastructure.

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