The government’s decision to switch to a new royalty formula for coal would erode the benefit currently available to captive coal miners by way of reduced royalty rates. At the same time, it would increase state governments’ royalty collection multi-fold.

As captive miners do not engage in any sale, these currently pay royalty to states as a percentage of the sale price realised at the nearest Coal India mine. This arrangement benefits captive miners, as Coal India (CIL) prices are 70-80 per cent lower than those of international benchmarks.