New Delhi, May 13: The Union Cabinet, chaired by Narendra Modi, has approved a ₹37,500 crore scheme to promote surface coal and lignite gasification projects, aimed at strengthening India’s energy security and reducing import dependence.
The initiative is expected to generate around 50,000 direct and indirect jobs across 25 projects, primarily in coal-bearing regions, according to an official statement.
As part of the reform push, the government has also extended coal linkage tenure to 30 years under the “Production of Syngas leading to Coal Gasification” framework in the Non-Regulated Sector (NRS), offering long-term policy certainty to investors.
Key Objectives
The scheme seeks to accelerate India’s coal gasification programme and support the national target of gasifying 100 million tonnes (MT) of coal by 2030. It aims to reduce reliance on imports of critical commodities such as:
- LNG (over 50% imported)
- Urea (20% imported)
- Ammonia (100% imported)
- Methanol (80–90% imported)
Approximately 75 MT of coal/lignite is expected to be gasified under the scheme to produce syngas and downstream products.
Incentives & Structure
- Financial support up to 20% of plant and machinery cost
- Maximum ₹5,000 crore incentive per project
- Cap of ₹9,000 crore per product (excluding certain categories)
- ₹12,000 crore cap per entity group across projects
- Incentives to be released in four instalments linked to milestones
- Transparent competitive bidding process for project selection
Economic Impact
The government estimates annual revenue of ₹6,300 crore from coal gasification, apart from additional GST and downstream economic gains.
India currently holds vast reserves of coal (401 billion tonnes) and lignite (47 billion tonnes), with coal contributing over 55% to the country’s energy mix.
Strategic Significance
The move comes amid rising global energy uncertainties and aims to reduce India’s import bill, which stood at around ₹2.77 lakh crore in FY25 for key energy-related products.
The scheme builds upon earlier initiatives such as the National Coal Gasification Mission (2021) and a ₹8,500 crore support package approved in 2024, under which multiple projects are already underway.
