The process of identifying suitable coal blocks as per grades of coal reserves has already been commenced and rules for allocation through the auction route would be complete within the next two months. Invitation for bids will be floated by June, once the ongoing first round auction of 101 blocks for captive mining is over, the official said.

The Ministry of Coal and Coal India Limited (CIL), the largest domestic miner, have already held informal talks with domestic and foreign stand-alone mining companies, including BHP Billiton and Rio Tinto, who were keen on entering the commercial coal mining sector, which has been opened up to private companies, he added.

The legislative framework was already in place and administrative rules were being worked out to enable stand-alone mining companies to enter the coal sector without any restriction on sale of coal from such projects, the official said, pointing out that ongoing auctions of coal blocks were exclusively for captive mining by companies operating in thermal power, steel and cement sectors.

However, in the case of foreign mining companies, the only restrictions would be for the entity to be mandatorily registered in India, before the miner was considered eligible for putting in bids for coal blocks at the auction, he said.

According to the ministry, several foreign mining companies interacting with the government had observed that commitment on investing in the Indian coal sector would be dependent on further clarity on the legislative environment and investors would wait until such time, enabling provisions for opening up the coal sector, which were legislated and passed by the Indian Parliament.

As things stand now, the coal sector has been reformed and opened up through the Coal Mines Special Provisions Ordinance, but this would have to be ratified by the parliament and doubts persist whether the incumbent government will be able to muster the majority to do so.