India ranked as the fourth-largest energy consumer in the world in 2011, following China, the United States, and Russia.

Coal is India’s primary source of energy (equaling 44% of total energy consumption), and the country ranked as the third-largest global coal producer, consumer, and importer of coal in 2012.

“Despite its coal reserves, India has experienced increasing supply shortages as a result of a lack of competition among producers, insufficient investment, and systemic problems with its mining industry,” the US Energy Information Administration said.

“Although production has increased by about 4% per year since 2007, producers have failed to reach the government's production targets.

“Meanwhile, demand grew more than 7% annually over the past five years with the rise of electricity demand and lower power generation from natural gas and hydroelectricity as a result of recent supply disruptions. Because power plants rely so heavily on coal, shortages are a major contributor to shortfalls in electricity generation and consequent blackouts throughout the country.”

Because coal production cannot keep pace with demand, India has met more of its coal needs with imports. Net coal import dependency has risen from practically nothing in 1990 to nearly 23% in 2012.

India imports thermal coal for power generation from Indonesia and South Africa. The steel and cement industries are also substantial coal consumers. India has limited reserves of coking coal, used for steel production, and imports large quantities of coking coal from Australia.

The country’s energy demand continues to climb as a result of its dynamic economic growth and modernisation. India is the third-largest economy on a purchasing power parity basis and has the world’s second largest population, according to World Bank data.

As India modernises and the population moves to urban areas, the country has shifted from using traditional biomass and waste to relying on other energy sources, including fossil fuels.

India’s newly elected government, with the Bharatiya Janat Party as the majority party, faces challenges to meet the country’s growing energy demand, to secure affordable energy supplies, and to attract investment for domestic hydrocarbon production and infrastructure development, said the US Energy Information Administration.