Centre Plans ₹37,500 Crore Incentive Scheme for Coal Gasification Projects Promotion

The Union Cabinet is likely to take up a ₹37,500 crore incentive scheme for promoting Coal Gasification Projects, as per the PTI report.  

The coal ministry has prepared a Cabinet note outlining the proposal. The plan focuses on scaling up projects that convert coal and lignite into usable fuels and chemical inputs. 

The scheme is structured as a single-category programme. It removes the earlier classification system used in previous incentive frameworks for gasification projects. 

Funding Structure 

Under the proposed scheme, financial assistance of up to ₹3,000 crore may be provided to a single project.  

In comparison, the earlier scheme had different caps, including ₹1,000 crore for private sector projects and ₹1,350 crore for public sector undertakings. 

The revised structure is intended to streamline funding provisions and allow participation across different types of developers without category-based limits. 

Use of Domestic Coal 

India holds coal reserves estimated at around 401 billion tonnes. Coal remains a major part of the energy mix, accounting for over 55% of total consumption. Demand for coal is expected to continue rising in line with industrial and power requirements. 

Gasification converts coal into synthesis gas, which can be used to produce fuels, fertilisers and chemicals. This process allows coal to be used in applications beyond direct burning. 

Reducing Imports 

The scheme is to reduce reliance on imports of key commodities such as LNG, ammonia, urea, methanol, dimethyl ether and coking coal used in direct reduced iron production. Domestic production of these materials is expected to support supply stability. 

Capacity Target 

The proposal is linked to a national goal of achieving 100 million tonnes of coal gasification capacity by 2030. It is to support the development of surface coal and lignite gasification projects across the country. 

Read More: Rohit Jain Appointed RBI Deputy Governor for 3-Year Term from May 3, 2026! 

Conclusion 

The proposed incentive scheme outlines a funding-backed approach to expand coal gasification capacity. It centres on domestic resource use and reducing dependence on imported inputs. 

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