India reduced its coking coal import spending by nearly 39% in FY26 compared to FY23, driven by a shift toward cheaper supplies from Russia and the US. This change, combined with falling global prices and better technology, helps domestic steelmakers manage costs. However, India's continued reliance on high-quality imported coal remains a significant factor for the industry.
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India has significantly lowered the cost of importing coking coal, a critical raw material for steel manufacturing. Exchange data and industry reports show that the import bill fell to $11.76 billion in the fiscal year 2026, down nearly 39% from $19.2 billion in FY23. This change reflects a deliberate strategy by Indian steelmakers to reduce their heavy dependence on Australian suppliers, which have traditionally been the primary source of premium coking coal.
Strategic Shift in Sourcing and Pricing
The move away from Australia is evident in the import value figures. Imports from Australia dropped from $10.63 billion in FY23 to $5.1 billion in FY26. While volumes saw a modest reduction of 9.24%, the sharp decline in value highlights that Indian firms have successfully negotiated better terms or pivoted toward more cost-effective suppliers. Russian coking coal has become particularly attractive, with volumes doubling to nine million tonnes by FY26. Despite this higher volume, the total import value from Russia rose by only 6.25% to $1.23 billion, demonstrating the benefit of substantial discounts.
Simultaneously, the United States has emerged as a major partner, with Indian imports of coking coal from the US rising by over 36% to reach 9.90 million tonnes in FY26. This diversification is supported by a general softening of global coal benchmarks. After peaking during the 2023 volatility, Australian benchmark prices fell significantly, settling at around $138.5 per metric ton by June 2026, down from the 2023 highs of $172.8.
Technology Adoption and Structural Risks
Beyond diversifying suppliers, the Indian steel industry has adopted Pulverized Coal Injection (PCI) technology. By using high-quality coal powder directly in blast furnaces, companies can replace a portion of more expensive metallurgical coke, effectively reducing production costs. While these measures offer a buffer, the sector remains sensitive to global market conditions. India’s domestic coking coal reserves are largely of lower quality, which makes them expensive to process and wash for industrial use. As a result, a vast majority of the high-grade coal required for large-scale steel production must still be imported.
This ongoing dependency means that Indian steel producers remain exposed to international price swings, ocean freight charges, and potential geopolitical risks. Investors should continue to monitor how these raw material costs influence the profit margins of major steel companies. Future updates to track include the sustainability of these price discounts from Russia and the US, as well as any progress in improving the utilization of domestic coal reserves through advanced washing and processing facilities.