Further doubts have been raised about the financial viability of proposals by two Indian multinationals to develop Australia’s largest coal mine in Queensland’s untapped Galilee Basin.

The twin projects, which would cost an estimated $10.8 billion, have received the strong backing of the federal and Queensland governments and were expected to create thousands of jobs.

But according to a new report by the Institute for Energy Economics and Financial Analysis, sinking coal prices and high development costs would make the project prohibitively expensive to supply India’s growing demand for electricity.

“The key point is that retail electricity prices in India are considerably lower than the level required for the profitable generation of imported coal-fired power, particularly when that coal is sourced from isolated deposits with none of the required infrastructure in the middle of Queensland,” said the report authored by Sydney-based fund manager Tim Buckley.

With Indian producers unable to supply enough coal to satisfy local energy demands, India’s Adani Group spent $525 million in 2010 to acquire the Carmichael lease, with rival Indian group GVK agreeing to pay around $1.36 billion to Gina Rinehart’s Hancock Prospecting for a separate lease in 2011.