India Allows Bangladesh, Bhutan, Nepal Direct Coal Purchases from CIL, Boosting Regional Trade
Neighboring nations can now directly buy coal from CIL, streamlining trade and fostering regional ties.
Photo by Carla
In a significant move to boost regional cooperation and energy security, India has allowed Bangladesh, Bhutan, and Nepal to directly purchase coal from Coal India Limited (CIL). This new arrangement bypasses intermediaries, making the procurement process more efficient and potentially cost-effective for these neighboring countries.
The decision aligns with India's 'Neighbourhood First' policy, aiming to strengthen economic ties and facilitate trade within the South Asian region. For UPSC aspirants, this highlights India's role as a regional power, leveraging its resources for diplomatic and economic influence, and promoting energy security in its immediate neighborhood.
Key Facts
Bangladesh, Bhutan, Nepal can directly buy coal from Coal India Limited (CIL)
Bypasses intermediaries
Aims to strengthen economic ties and energy security
UPSC Exam Angles
India's Foreign Policy: 'Neighbourhood First' and its practical applications.
Energy Security: Regional dimensions and India's role as a provider.
Economic Diplomacy: Leveraging state-owned enterprises (CIL) for strategic objectives.
Regional Cooperation: Strengthening ties with BBN countries, potentially impacting groupings like BBIN.
Geopolitics: India's influence in South Asia amidst growing external interests.
Visual Insights
India's Neighbourhood First: Coal Trade with BBIN Nations (Jan 2026)
This map illustrates the geographical context of India's decision to allow Bangladesh, Bhutan, and Nepal direct coal purchases from Coal India Limited (CIL). It highlights the countries involved in this enhanced regional trade and energy cooperation under the 'Neighbourhood First' policy.
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More Information
Background
India's 'Neighbourhood First' policy, initiated in 2014, aims to foster closer diplomatic, economic, and cultural ties with its immediate neighbours. Energy security and regional trade facilitation are key pillars of this policy.
Historically, trade with landlocked neighbours like Nepal and Bhutan, and even Bangladesh, often involved intermediaries, adding to costs and logistical complexities. India, being a major coal producer through Coal India Limited (CIL), has been a crucial energy supplier in the region.
Latest Developments
Practice Questions (MCQs)
1. With reference to India's 'Neighbourhood First' policy and its recent initiatives, consider the following statements: 1. The policy aims to enhance connectivity, trade, and people-to-people contact with all immediate neighbours. 2. Allowing Bangladesh, Bhutan, and Nepal to directly purchase coal from Coal India Limited (CIL) is intended to bypass intermediaries, making procurement more cost-effective. 3. Coal India Limited (CIL) is a Maharatna Public Sector Undertaking under the Ministry of Coal. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: D
Statement 1 is correct. The 'Neighbourhood First' policy is a core component of India's foreign policy, focusing on strengthening relations with its immediate neighbours through various means including connectivity, trade, and cultural exchanges. Statement 2 is correct. The news explicitly states that the direct purchase arrangement bypasses intermediaries, aiming for more efficient and potentially cost-effective procurement for the beneficiary countries. Statement 3 is correct. Coal India Limited (CIL) is indeed a Maharatna PSU and operates under the administrative control of the Ministry of Coal, Government of India.
2. In the context of regional energy cooperation in South Asia, which of the following statements is NOT correct?
- A.The BBIN (Bangladesh, Bhutan, India, Nepal) Initiative primarily focuses on enhancing motor vehicle movement and connectivity, but also has implications for energy trade.
- B.SAARC (South Asian Association for Regional Cooperation) has successfully implemented a comprehensive regional energy grid for all its member states.
- C.India has been actively promoting cross-border electricity trade with its neighbours like Bangladesh and Nepal.
- D.The recent decision allowing direct coal purchases by BBN countries from CIL aims to bolster their energy security.
Show Answer
Answer: B
Statement A is correct. The BBIN Initiative aims to improve connectivity and facilitate trade, including energy, among its member countries. Statement B is NOT correct. While SAARC has discussed regional energy cooperation, it has not successfully implemented a comprehensive regional energy grid for all its member states due to various geopolitical and logistical challenges. Energy cooperation within SAARC has been limited. Statement C is correct. India has significant cross-border electricity trade agreements and projects with countries like Bangladesh, Nepal, and Bhutan. Statement D is correct. The direct coal purchase mechanism is explicitly aimed at making coal procurement more efficient and potentially cost-effective, thereby enhancing the energy security of Bangladesh, Bhutan, and Nepal.
3. Consider the following statements regarding Coal India Limited (CIL): 1. It is the world's largest coal producer, operating through several wholly-owned subsidiaries. 2. CIL primarily focuses on lignite mining, with a minor share in bituminous coal production. 3. The company holds a significant share of India's total coal production, making it a key player in the nation's energy sector. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.1 and 3 only
- C.3 only
- D.1, 2 and 3
Show Answer
Answer: B
Statement 1 is correct. Coal India Limited (CIL) is indeed the world's largest coal producer, operating through its eight wholly-owned coal-producing subsidiaries and one mine planning and consultancy company. Statement 2 is NOT correct. CIL primarily focuses on the production of bituminous coal, which is the most common type of coal used for power generation and industrial purposes in India. Lignite mining is handled by other entities like NLC India Limited (formerly Neyveli Lignite Corporation). Statement 3 is correct. CIL accounts for over 80% of India's total coal production, making it a dominant force and a critical component of India's energy security.
4. The 'Neighbourhood First' policy is often seen as a cornerstone of India's foreign policy. Which of the following is NOT an explicit objective or characteristic of this policy?
- A.Prioritizing bilateral relations with immediate neighbours over multilateral engagements.
- B.Enhancing regional connectivity through infrastructure projects and trade facilitation.
- C.Providing humanitarian assistance and disaster relief to neighbouring countries.
- D.Promoting cultural exchanges and people-to-people ties to build goodwill.
Show Answer
Answer: A
Statement A is NOT an explicit objective or characteristic. While 'Neighbourhood First' prioritizes immediate neighbours, it does not necessarily mean prioritizing bilateral relations *over* multilateral engagements. India actively participates in multilateral forums like BIMSTEC, SAARC (though less active currently), and BBIN, which involve its neighbours. The policy aims to strengthen bilateral ties *within* a broader framework that can also include multilateral cooperation. It's about giving primacy to neighbours, not exclusivity over multilateralism. Statement B is correct. Connectivity (road, rail, waterways, digital) and trade facilitation are central to the policy. Statement C is correct. India frequently extends humanitarian assistance and disaster relief to its neighbours, which is a key aspect of building goodwill and demonstrating regional leadership. Statement D is correct. Cultural exchanges and people-to-people contacts are vital for fostering deeper understanding and stronger bonds.