India's coal demand is set to grow 4.2% year on year to 1.35 billion tonnes in 2026, as stronger power and industrial needs sustain consumption while the country cuts its reliance on imported thermal coal, according to the International Energy Agency (IEA).

The rise will also make India the main driver of global metallurgical coal demand this year, the IEA said in its Coal Mid-Year Update 2026 released on September 10, noting that higher pig iron production to meet stronger steel demand is pushing up coking coal consumption.

Steel demand raises coking coal use

Global coking coal demand is anticipated to stay broadly flat in 2026 as regional trends offset one another. India, however, is expected to account for the main increase, the report said.

Rising pig iron output to fulfill robust steel demand is expected to drive metallurgical coal demand in India. Most of the extra steel output is likely to come from the blast furnace-basic oxygen furnace route, which uses coking coal, IEA said.

Thermal coal imports decline

India's coking coal needs are climbing even as thermal coal imports move in the other direction.

The IEA projects India's seaborne thermal coal imports to fall to around 160 million tonnes in 2026, 4.19% lower than 167 million tonnes in 2025. High inventories and efforts to replace imported coal with domestic supplies are weighing on purchases by utilities and industrial consumers, it said.

India is also raising domestic coal output. Production is forecast to reach a record 1.10 billion tonnes in 2026, with captive and private mines boosting growth while Coal India Limited's output increase slows. India is projected to set another production record in 2027.

Power and industry support demand

The 4.2% rise in overall coal demand comes even as renewable power expands quickly, the report said.

Higher electricity demand is expected to spur coal use in 2026. The IEA also expects a strong El Nino to raise cooling needs and cut hydropower availability, further shoring up coal-fired power generation.

Industrial demand is another key driver. The IEA identifies pig iron, direct reduced iron and cement as India's three largest coal-consuming industrial sectors.