Estimating foliar dust (FD) is essential in understanding the complex interaction between FD, vegetation, and the environment. The elevated FD has a significant impacts on vegetation physiological processes. The present study aims to explore the potential of multi‐sensor optical satellite data sets (e.g., Landsat‐8, 9; Sentinel‐2B, and PlanetScope) in conjunction with in situ data sets for FD estimation over the Jharsuguda coal mining region in Eastern India. The efficacy of different spectral bands and various radiometric indices (RIs) was tested using linear regression models for FD estimation. Furthermore, the study attempts to quantify the impacts of FD on vegetation's physiological processes (e.g., carbon uptake, transpiration, water use efficiency, leaf temperature) through proxy data sets. The key findings of the study uncovered sensor‐specific and common trends in vegetation spectral profiles under varying FD concentrations. A saturation threshold was observed around 50 g/m2 of FD concentration, beyond which additional FD concentration exhibited limited impact on spectral reflectance. On the other hand, the assessment of FD estimation models revealed distinct performances and shared trends across various satellite sensors. Notably, near‐infrared and shortwave infrared‐1 bands, along with certain RIs, such as the Global Environmental Monitoring Index and the Non‐Linear Index, emerged as pivotal for accurate FD estimation. Besides, the study results revealed that vegetation‐associated carbon uptake experienced a ∼2 to 3 gC reduction for every additional gram of FD per square meter. Moreover, the vegetation transpiration reduction per unit of FD ranged from approximately 0.0005 to 0.0006 mm/m2/day, highlighting a moderate impact on transpiration levels. These findings aid a significant evidence base to our understanding of FD's impact on vegetation physiological processes.