The Union Cabinet is likely to approve a Rs 37,000-crore incentive scheme to accelerate coal gasification projects across India.
The move is aimed at cutting the country's heavy reliance on imported LNG, urea, ammonia and methanol while unlocking cleaner industrial use of its vast domestic coal reserves, sources told NDTV Profit.
The Ministry of Coal has already prepared a cabinet note on the proposal, sources said. The proposed scheme aims to accelerate surface coal and lignite gasification projects across the country, and support the national target of achieving 100 million tonnes of coal gasification capacity by 2030.
Major Scale-Up From 2024 Scheme
The scheme represents a significant scale-up from the Rs 8,500-crore incentive programme approved in January 2024, which laid the foundation for coal gasification in India. The earlier scheme supported seven projects across three categories — Category I reserved for PSUs with Rs 4,050 crore, Category II open to private players and PSUs with Rs 3,850 crore, and Category III focused on demonstration projects with Rs 600 crore.
The new proposal marks a near four-fold increase in outlay and is structured differently. This is a unified scheme with no categories, and the maximum financial assistance for a single project is Rs 3,000 crore — a significant jump from the earlier cap of Rs 1,000 crore per project for the private sector and Rs 1,350 crore per project for PSUs.
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Why Coal Gasification Matters
India imports approximately 83% of its oil, over 90% of its methanol and 13–15% of its ammonia. Coal gasification — a thermo-chemical process that converts coal into synthesis gas or "syngas", consisting primarily of carbon monoxide and hydrogen — offers an opportunity to reduce this reliance on imports and conserve foreign exchange, especially in the oil, gas, fertiliser and petrochemical sectors.
The scheme is aimed at reducing import dependence on critical commodities, such as LNG, urea, ammonium nitrate, ammonia, coking coal via DRI, methanol and DME, while enabling enhanced utilisation of domestic coal and lignite resources for fuels and chemicals production.
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India's Coal Advantage
India's vast coal reserves, estimated at 378 billion tonnes with about 199 billion tonnes classified as proven, present significant opportunities for energy production.
Currently, around 80% of India's coal is utilised in thermal power plants. The new scheme seeks to diversify that use — channelling coal into fertilisers, petrochemicals, synthetic gas and steel inputs rather than burning it exclusively for power.
The cabinet is currently in session. A formal announcement is expected shortly.
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