New Delhi, May 13, 2026: The Union Cabinet chaired by Prime Minister has approved a ₹37,500 crore scheme to promote surface coal and lignite gasification projects across the country. The initiative aims to accelerate India’s coal gasification programme and help achieve the national target of gasifying 100 million tonnes of coal by 2030. The scheme is expected to strengthen energy security and reduce dependence on imports of LNG, ammonia, methanol, urea, and coking coal.
The government has also extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” category in the Non-Regulated Sector linkage auction framework. The move is intended to provide long-term policy stability and encourage private investment in the sector.
Key Highlights of the Scheme
- Total financial outlay of ₹37,500 crore.
- Targets gasification of nearly 75 million tonnes of coal and lignite.
- Incentives of up to 20% of plant and machinery costs.
- Selection of projects through a transparent competitive bidding process.
- Incentives to be released in four instalments linked to project milestones.
- Financial support capped at ₹5,000 crore per project.
- Maximum incentive of ₹9,000 crore for a single product category, excluding synthetic natural gas and urea.
- Total support for one entity group capped at ₹12,000 crore across all projects.
- Scheme remains technology-neutral while encouraging indigenous technologies.
The government estimates the scheme could attract investments worth ₹2.5 lakh crore to ₹3 lakh crore. The initiative is projected to create around 50,000 direct and indirect jobs across nearly 25 projects particularly in coal-bearing regions.
Officials say the programme will help reduce India’s dependence on imported fuels and industrial chemicals protecting the economy from global price fluctuations and geopolitical disruptions. The Centre also expects annual revenue generation of around ₹6,300 crore from coal and lignite utilisation, in addition to GST and other tax revenues from downstream industries.
India has around 401 billion tonnes of coal reserves and approximately 47 billion tonnes of lignite reserves. Coal currently contributes more than 55% of the country’s energy mix.
Coal gasification converts coal and lignite into synthesis gas or syngas which can be used to produce fuels, fertilisers, and industrial chemicals domestically.
According to government estimates, India’s import bill for products that can potentially be replaced through coal gasification including LNG methanol ammonia, urea, and coking coal stood at nearly ₹2.77 lakh crore in FY2025.
The new scheme builds upon the National Coal Gasification Mission launched in 2021 and the earlier ₹8,500 crore coal gasification support programme approved in January 2024 under which eight projects worth ₹6,233 crore are currently under implementation.
