I have a coordinate system in coal grid which is exclusively for coalfields of India in QGIS.
I want to transfer it from the coal grid to UTM.
I have .prj file of coal grid, But I don't know how to include it. How to set custom project system?
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If the .prj file has the same name as your file and it is in the same directory, QGIS should already detect the file and configure the project's CRS to it.
If not, right click to the layer, Save as..., and select the CRS that you want.
EDIT: In case you want to create the .prj file by yourself, add the CRS in WKT format. Example of the EPSG 3035 CRS in WKT: