Bhubaneswar: The Union Cabinet of India, chaired by Prime Minister Narendra Modi, has approved a major scheme for promotion of surface coal and lignite gasification projects with a total financial outlay of ₹37,500 crore.
The scheme aims to accelerate India’s coal gasification programme and support the national target of gasifying 100 million tonnes of coal by 2030 while strengthening energy security and reducing dependence on imported fuels and chemicals.
Officials said the initiative is designed to reduce imports of key products such as Liquefied Natural Gas (LNG), urea, ammonia and methanol, sectors where India remains significantly dependent on overseas supply.
As part of the reform package, the government has also extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” category within the Non-Regulated Sector linkage auction framework, providing long-term policy certainty for investors.
Under the scheme, financial incentives of up to 20 per cent of plant and machinery costs will be provided for new surface coal and lignite gasification projects. The programme targets gasification of nearly 75 million tonnes of coal and lignite.
Project selection will be carried out through a competitive bidding process based on parameters such as project cost, coal input and syngas output. Incentives will be released in four equal instalments linked to project milestones.
The government has capped financial assistance at ₹5,000 crore for any single project, ₹9,000 crore for any single product category — excluding Synthetic Natural Gas and urea — and ₹12,000 crore for any single business group across all projects.
Officials said the scheme is technology-agnostic but encourages adoption of indigenous technologies to strengthen India’s domestic coal gasification ecosystem and reduce reliance on foreign EPC contractors.
The Centre estimates that the initiative could mobilise investments worth ₹2.5 lakh crore to ₹3 lakh crore and generate nearly 50,000 direct and indirect jobs across around 25 projects, particularly in coal-bearing regions.
According to the government, utilisation of 75 million tonnes of coal through gasification is expected to generate annual revenue of around ₹6,300 crore in addition to downstream GST and related tax collections.
India currently possesses coal reserves of around 401 billion tonnes and lignite reserves of nearly 47 billion tonnes, with coal accounting for more than 55 per cent of the country’s energy mix.
The government noted that India’s import bill for products that could potentially be substituted through coal gasification — including LNG, ammonia, methanol and coking coal — stood at nearly ₹2.77 lakh crore in FY2025, highlighting vulnerabilities linked to global supply disruptions and geopolitical tensions.
The new programme builds upon the National Coal Gasification Mission launched in 2021 and an earlier ₹8,500 crore scheme approved in January 2024, under which eight projects worth ₹6,233 crore are currently under implementation.
-OdishaAge
