India's coal imports rose 21 percent to 152 million tonnes last year as power producers bought more due to low prices and a domestic shortage, research firm OreTeam said, adding that shipments could rise to 170 million tonnes this year.
Bureaucratic, environmental and legal delays in adding new mines and expanding existing ones have made India the No. 3 importer of coal, behind China and Japan, even though it sits on what BP Plc ranks as the world's fifth-largest reserves.
Most of the imports come from Indonesia, South Africa, Australia and Canada. India shipped in a total of 126 million tonnes of power-generating thermal coal, steelmaking coking coal and processed coking coal, or metallurgical coal, in 2012.
"Rising thermal coal demand is the major reason behind India's surging imports," said Prakash Duvvuri, head of research at OreTeam, which collects data from its representatives at ports, mining regions and companies.
The data is not yet publicly available.
The imports were also helped by weak prices. Benchmark thermal coal prices hit their lowest levels in almost four years in September, dropping below $77 a tonne mainly due to oversupply in Australia, Indonesia and the United States.
In the United states, the shale oil and gas revolution has made more coal available.
Prices have recovered from September's deep trough, but are still not much higher than $82 a tonne.
India's thermal coal imports are expected to continue to rise in coming years as it races to increase its per-capita power consumption of about 778 kilowatt-hour (kWh), equivalent to about 30 percent of the global average of 2,600 kWh.
The country's power generation is expected to rise 7 percent to 975 billion kWh this fiscal year ending March 31, with most of that powered by coal. The federal government has also approved many power projects that would add to the demand.
Though the government does not regularly release data on coal imports, the Coal Ministry has said domestic output could fall short of demand by 155 million tonnes this fiscal year.
That could lead to a 13 percent rise in imports for the year ending March 31 from 137.56 million tonnes in the year earlier.
More than 80 percent of India's coal production comes from state-run Coal India Ltd (CIL), which has fallen short of its production target for at least the past six years due to difficulties in obtaining environmental approvals, lack of railway access and other issues.
Its April-December output of 319.2 million tonnes was 4 percent less than its target for the period.
CIL, the world's largest coal mining company, estimates a shortage of 350 million tonnes for 2016-17.
Indonesia would likely be the biggest beneficiary of that shortfall; it already accounts for more than 50 percent of India's coal imports.
Goldman Sachs said on Tuesday that global demand for thermal coal will rise 2.75 percent a year between 2014 and 2017, driven by Japan, South Korea and emerging markets such as India.