India is fine-tuning a plan to open up commercial coal mining to private companies for the first time in four decades. It is part of the government's plan to shift the world's third-biggest coal importer towards energy self-sufficiency.

Coal secretary Anil Swarup says that the government has identified mines it plans to auction and is finalising other terms such as eligibility criteria for companies to take part and the form that revenue sharing will take. He said a plan should be ready in 2-3 months.

India has a plan to double its annual coal production to 1.5 billion tonnes by 2020, as part of Prime Minister Narendra Modi’s push to bring power to 300 million people who live without electricity, and give a boost to manufacturing.

This would also support efforts to develop eastern parts of the country, which are resource-rich and hold most of the nation’s coal reserves but lag behind western states in development.

India’s domestic coal industry is dominated by state-owned Coal India which is on track to produce 1 billion tonnes a year by the end of this decade. India is counting on private firms to produce the remaining 500 million tonnes, which may prove a tough target to achieve.

Only Coal India and a small government-owned company are allowed to mine and sell coal in India.

The proposal is likely to attract coal block bids from Indian conglomerates such as the Adani Group and GVK, but the government may find it harder to lure big multi-national miners. Coal prices are at multi-year lows amid global oversupply and foreign companies have faced obstacles to investing in India, such as problems in getting land and environmental approvals.

Some private companies are also concerned that the best quality mines would be left for Coal India.

Anil Swarup was handpicked by Modi to lead a turnaround in the coal sector soon after the prime minister came to power in 2014.

Under his watch, Coal India has seen record production growth and the government auctioned off a series of coal blocks successfully while coal imports fell for a sixth straight month in December.

Until last year India spent around $16 billion a year importing foreign coal, even though it sits on the world’s fifth-biggest reserves of more than 300 billion tonnes.