Australia needs to shape up its mining regulation and investment policies to meet the doubling to tripling global coal demand expected from China and India. Australia tops India's checklist as preferred coal supplier and business partner.

With India's escalating energy crisis, the country is on the edge to increase coal importation as well as scout possible coal ventures with miners around the world. India's coal production was just 59 million tonnes short four years ago. This year, India aims to produce 554 million tonnes of coal. But it actually needs 696 million. By 2016-17, India will require a billion tonnes.

India is currently plagued by blackouts and electricity malfunctions because of its rapid urbanization. Supply can no longer keep up with demand. According to India's Central Electricity Authority, the country needs 10 percent more electricity that it can produce, while across the country, 40 percent of the people get electricity for less than 12 hours daily. And many of its 404 million people still have no access to electricity at all.

Moreover, the government, for this year alone, hopes to provide electricity to more than 5.2 million impoverished households.

Coal is actually abundant in India, as in fact it is the third largest miner of indigenous supplies in the world, with millions of tonnes still yet to be developed. Local coal production grew 7 per cent annually from 2000 to 2005. But it declined in the past two years, barely inching above 550 million tonnes.

However, with India's bureaucratic policies and stricter environmental guidelines, the coal still takes times to slide down the tunnel, forcing private companies to set their sights across the seas.

And India knows it cannot just be simple buyer of coal alone. It has to purchase coal mines around the world.

Indian private firms have taken a look at Australia, Indonesia, South Africa and Mozambique. Each country has its positives and pitfalls, but Australia has few drawbavks.

Among the three, Australia is the best candidate for business acquisitions and partnerships for its stable governance, vast amounts of high-quality coal and excellent infrastructure. Although India thinks Australian coal is highly overpriced, given its ample supply, Australia is still its preferred coal mining destination and alliance.

"I think the level of interest is strong, the level of demand in India is very strong, and I think more Indian companies are comfortable with the prices that they're going to have to pay," The Sydney Morning Herald quoted Australia's high commissioner to India Peter Varghese as saying to The Age.

''If you went back two or three years, a number of Indian companies looked at investing in Australia but thought that the prices were too high. It seems to me those calculations are being reviewed,'' he added.

Indian Firms Acquire Australian miners

A number of Indian private firms have sealed alliances with Australian miners regardless of the high cost, like the Gujarat-based Adani Group, which bought Linc Energy's Queensland coal tenements in August to the tune of $2.72 billion.

Last week, GVK acquired a 79 percent stake in Hancock Coal's thermal coal assets in Queensland's Galilee Basin worth $1.26 billion. And in March, a $730 million deal was signed between Lanco Infratech and Griffin Coal's mines in Western Australia.

Varghese sees India's of thermal coal for power generation fuelling the trade relations between the two countries for the years to come. He also noted India's growing requirement for coking coal and even iron ore for steel production, and LNG.