E-Paper
Cabinet approves ₹37,500 cr coal gasification scheme to boost energy security
Coal gasification is a thermo-chemical process that converts coal into synthesis gas, consisting of carbon monoxide and hydrogen
The Union cabinet on Wednesday approved a coal/lignite gasification scheme with a financial outlay of ₹37,500 crore.
It is a step towards advancing the national target of gasifying 100million tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG [liquefied natural gas[ (more than 50% imported), urea (~20% imported), ammonia (~100% imported), and methanol (~80–90% imported), the note on Cabinet decisions said.
India’s import bill for LNG, urea, ammonium nitrate, ammonia, coking coal, methanol and others stood at approximately ₹2.77 lakh crore in financial year 2025, a vulnerability further exposed by the ongoing geopolitical situation in West Asia, the note emphasised.
The new scheme builds on the National Coal Gasification Mission (2021) and a ₹8,500 crore scheme approved in January 2024 (under which eight projects worth ₹6,233 crore are under implementation).
Coal gasification is a thermo-chemical process that converts coal into synthesis gas, consisting of carbon monoxide and hydrogen.
The new scheme with financial outlay of ₹37,500 crore to incentivises new surface coal/lignite gasification projects for production of syngas and its downstream products, targeting gasification of approximately 75MT of coal/lignite.
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Financial incentive will be provided at a maximum of 20% of the cost of plant and machinery. The selection will be through a competitive bidding process, with an evaluation framework benchmarking project cost, coal input, and syngas output.
The financial incentive for any single project will be capped at ₹5,000 crore; for any single product (except synthetic natural gas and urea) capped at ₹9,000 crore; and any single entity group capped at ₹12,000 crore across all projects.
The note said that coal gasification is strategically important.
“Diversified use of coal resources and substitutes imports of LNG, urea, ammonia, ammonium nitrate, methanol, and coking coal, insulating India from global price volatility and geopolitical supply-chain disruptions and advancing the Atmanirbhar Bharat and Make in India objectives,” it said.
The scheme is projected to create around 50,000 direct and indirect jobs across 25 projects in coal-bearing regions.
India holds one of the world’s largest coal reserves (~401 billion tonnes) and lignite reserves (~47 billion tonnes). Coal accounts for over 55% of the country’s energy mix.
