Government Approves ₹37,500 Crore Coal Gasification Scheme to Cut Import Dependence

The Union Cabinet chaired by Prime Minister Narendra Modi has approved a new ₹37,500 crore scheme aimed at accelerating coal and lignite gasification projects across the country.  

The initiative forms part of India’s broader strategy to strengthen energy security, reduce import dependence, and support domestic manufacturing of fuels and chemicals. 

The scheme is expected to support the national target of gasifying 100 million tonnes of coal by 2030 while promoting production of syngas and downstream products such as methanol, ammonia, synthetic natural gas, and urea. 

Government Targets Large-Scale Coal Gasification Expansion 

According to the government, the scheme aims to incentivise new surface coal and lignite gasification projects with a target of gasifying nearly 75 million tonnes of coal and lignite. 

Financial incentives of up to 20% of plant and machinery cost will be provided through a competitive bidding framework linked to project milestones. 

The government has capped incentives at ₹5,000 crore for a single project and ₹12,000 crore for any single entity group across all projects.  

In a parallel policy reform, the Centre has also extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” segment to provide long-term investment visibility for companies. 

The scheme is expected to mobilise investments worth nearly ₹2.5 lakh crore to ₹3 lakh crore while supporting around 25 projects across coal-bearing regions. The government estimates that the initiative could generate nearly 50,000 direct and indirect jobs. 

Scheme Aims to Reduce Energy Import Dependence 

The Centre stated that the programme is designed to reduce dependence on imports of LNG, ammonia, methanol, urea, and coking coal.  

India currently imports a substantial portion of these products, exposing the economy to global price fluctuations and geopolitical supply disruptions. 

The government noted that India’s import bill for key substitutable products such as LNG, urea, ammonia, methanol, DME, and coking coal stood at nearly ₹2.77 lakh crore in FY25.  

Coal gasification converts domestic coal and lignite into synthesis gas, which can be used as feedstock for fuels and chemical production. 

The latest scheme builds upon the National Coal Gasification Mission launched in 2021 and the earlier ₹8,500 crore coal gasification support package approved in January 2024, under which multiple projects are already under implementation. 

Read More: Government Sets June 7 as Annual Release Date for Provisional GDP Estimates! 

Conclusion 

The ₹37,500 crore coal gasification scheme marks a major push towards domestic energy manufacturing, import substitution, and long-term energy security while supporting India’s broader Atmanirbhar Bharat and industrial growth objectives. 

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