The Union Cabinet is expected to approve a Rs 37,500 crore incentive scheme to promote coal gasification projects aimed at boosting clean energy production and reducing import dependence.
The Coal Ministry has prepared a Cabinet note with the financial outlay, marking a significant expansion from the Rs 8,500 crore programme approved in January 2024.
The proposed scheme aims to accelerate surface coal and lignite gasification projects across the country, promoting self-reliance by reducing import dependence on critical commodities such as LNG, urea, ammonium nitrate, ammonia, coking coal, methanol and DME.
The initiative supports the national target of 100 million tonnes coal gasification capacity by 2030, whilst enabling enhanced utilisation of domestic coal and lignite resources for fuels and chemicals production.
Unlike the earlier scheme which operated under three categories, this is a unified scheme with no categories, and the maximum financial assistance for a single project stands at Rs 3,000 crore.
Previously, the government provided a maximum incentive of Rs 1,000 crore per project for the private sector and Rs 1,350 crore per project for public sector undertakings.
The government’s renewed push for coal gasification comes in the wake of recent West Asia tensions that have exposed the country’s vulnerability to disruptions in LNG, LPG and other hydrocarbon supplies.
The government is now positioning coal gasification as a strategic lever to convert domestic coal into fuels and chemicals while strengthening energy security at a time when global supply chains remain fragile.
Gasification presents a unique opportunity for India to unlock the full value of its vast domestic reserves of 401 billion tonnes through clean and efficient utilisation pathways.
By converting coal into syngas, the process enables domestic production of downstream products such as chemicals, petrochemicals, fertilisers, power and direct reduced iron, reducing reliance on expensive imports.