India's coal demand is expected to rise 17% over the next five years, even as coal grabs a lower share in the country's power mix, according to a report published by the International Energy Agency (IEA).

In the report titled Coal 2025: Analysis and Forecast to 2030, IEA expected India's coal consumption in 2025 to drop by 1.2%, mainly driven by a 3% drop in coal-fired power generation, as well as the country's sustained expansion of renewable energy capacity.

Total installed power capacity in the country stood at 495 GW in August 2025, including 253 GW of coal-fired capacity, 123 GW of solar, 52 GW of wind, and 42 GW of hydropower, along with small shares of gas, nuclear, and other sources.

The decline in coal demand and rapid renewable growth signals positive momentum for India's energy transition, helping the country to meet its development, growth, energy security and climate goals, said Madhura Joshi from the Third Generation Environmentalism (E3G).

However, India has seen a growing coal demand from its non-power sector, driven by strong infrastructure activities and steady expansion in the cement and steel industries, IEA noted.

India is the world's second largest cement market, with the demand expected to grow 5-6% in 2025 and remain elevated in the medium term.

Growing capacity of major cement makers, rising steel output (particularly through coal-based direct reduced iron) and coal gasification projects are enhancing the role of coal in India's industrial growth, underscoring the continued importance of thermal and metallurgical coal, the report said.

The report expected India's non-power coal consumption to reach 356 million tonnes in 2025, and rise further to 470 million tonnes by 2030. As such, total coal demand in India is expected to increase 17% by the end of the decade, it concluded.