The government is likely to soon approve a ₹37,500 crore incentive scheme to promote coal gasification projects, according to sources. The initiative aims to boost cleaner energy production while simultaneously reducing the country’s dependence on imports of critical fuels and chemicals. The Ministry of Coal has already prepared a note outlining the scheme’s framework and financial outlay, indicating that approval could be imminent.
Focus on Domestic Resource Utilisation and Capacity Expansion
The proposed scheme is designed to accelerate surface coal and lignite gasification projects across the country. In doing so, it will promote self-reliance by reducing imports of key commodities such as LNG, urea, ammonium nitrate, ammonia, methanol, DME, and coking coal for DRI production. At the same time, the initiative will support the government’s ambitious target of achieving 100 million tons of coal gasification capacity by 2030. Unlike earlier frameworks, the new scheme will follow a unified structure without categories, with a maximum financial assistance of ₹3,000 crore per project.
Shift from Earlier Incentive Framework
Previously, the government offered incentives under three separate categories, with financial support capped at ₹1,000 crore per project for private players and ₹1,350 crore for public sector undertakings (PSUs). However, the revised scheme simplifies the structure while significantly increasing the incentive ceiling, thereby making large-scale projects more viable and attractive for investors.
Strategic Response to Global Energy Uncertainty
The renewed push for coal gasification comes amid geopolitical tensions in West Asia, which have highlighted India’s vulnerability to disruptions in LNG, LPG, and other hydrocarbon supplies. As a result, the government is positioning coal gasification as a strategic lever to convert domestic coal into fuels and chemicals, strengthen energy security, diversify feedstock sources and reduce exposure to global supply chain volatility.
Leveraging India’s Vast Coal Reserves
India holds one of the world’s largest coal reserves, estimated at over 401 billion tons, giving it a significant advantage in developing a self-reliant energy ecosystem. Currently, coal accounts for more than 55% of India’s energy mix, and as the second-largest producer and consumer globally, the country’s coal demand is expected to rise alongside growing energy needs.
Coal Gasification: Unlocking Value Through Cleaner Pathways
Coal gasification offers a cleaner and more efficient pathway to utilise domestic coal resources. The process converts coal into synthetic gas (syngas), which can then be used to produce chemicals and petrochemicals, fertilisers, power and Direct reduced iron (DRI). By enabling the domestic production of these critical inputs, coal gasification can enhance industrial competitiveness while supporting India’s broader energy transition goals.
Driving a Resilient and Sustainable Energy Future
As reported by fortuneindia.com, the proposed ₹37,500 crore scheme represents a significant policy intervention aimed at strengthening India’s energy security, industrial growth, and sustainability agenda. As the country continues to navigate global energy uncertainties, coal gasification is set to play a pivotal role in building a resilient, diversified, and future-ready energy ecosystem.
