The Indian government plans to allow public-private partnerships (PPP) to mine coal with state-owned coal producer Coal India to enhance domestic coal production and cut imports.

Finance minister Chidambaram made the announcement in his recent Budget speech in Parliament, saying that the country must diminish dependence on foreign coal in the medium to long term.

"One of the ways forward is to devise a PPP policy framework, with CIL as one of the partners, in order to increase the production of coal for supply to power producers and other consumers.

"These matters are under active consideration and the minister of coal will announce the government’s policies in this behalf in due course," Chidambaram said.

As part of the initiative, about 15 miners will be awarded the public private partnership before the end of 2015.

The move is expected to develop best mining practices applicable globally in addition to higher production.

To implement the PPP model, the government is now required to introduce changes to its Coal Mines (Nationalisation) Act, 1973, which stipulates that all the generated coal, other than from captive mines, must be sold only to specified end users.

Coal imports are projected to increase to 185 million tons by 2017 from the current 100 million tons, as requirement for coal to feed existing and planned power plants continues to increase.