India is set to prevent top mining firms from tapping 35 percent of the country's coal reserves due to environmental concerns in forested areas, the Financial Times reported Tuesday.
The decision to make the reserves "off-limits" is part of plans to better regulate the mining industry, which has paid scant attention to environmental rules in the past, the report said.
"I cannot, in clear conscience, clear these projects in the ‘no-go areas,’" minister Jairam Ramesh told the newspaper in an interview.
The deposits are located in some of India's most densely forested and biologically rich and diverse regions that are inhabited by poor tribal people -- areas that are also strongholds of Maoist insurgents.
India could no longer afford to approve every proposed mine, Ramesh said, adding: "There are areas where mining has clearly exceeded the carrying capacity."
This means privately held firms like Essar -- which has just listed in London -- Reliance and Adani, besides state-owned Coal India, will be prevented from accessing the deposits.
Some of the projects had received approval "in principle" several years ago to mine in areas now to be declared off-limits, the report said.
Ramesh admitted his new plan would mean Asia’s third-largest economy would have to import more coal, but insisted the decision was crucial to save India’s natural habitats.
The government's new stance looks set to upset mining firms and power project developers.
"Companies are agitated," the Financial Times quoted an unidentified executive from an infrastructure firm as saying. "Many have already ordered equipment and moved forward on this basis."
But Ramesh was unmoved.
"It’s all very well to say environment and development have to go hand in hand, but what are the practical implications of that?" he said adding he favoured applying similar criteria to other mineral resources.
India is the world’s third-largest producer of coal and lignite.