New Delhi, May 13: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a new scheme to promote Surface Coal and Lignite Gasification Projects with a total financial outlay of ₹37,500 crore.
The initiative is aimed at accelerating the adoption of coal gasification technology to convert domestic coal and lignite into syngas, which can be used for producing critical industrial inputs such as natural gas, ammonia, urea, and methanol.
Key objectives of the scheme
The scheme targets the gasification of 100 million tonnes of coal by 2030, strengthening India’s efforts toward greater energy self-reliance and reduced import dependence.
It is expected to support the development of around 25 projects across coal-bearing regions and generate approximately 50,000 direct and indirect jobs.
Incentive framework
Financial support will be provided as a capital incentive of up to 20% of the cost of plant and machinery, subject to prescribed limits per project and promoter entity.
The incentives will be released in four instalments, linked to the achievement of defined project milestones to ensure timely implementation and accountability.
Reducing import dependence
The scheme is designed to reduce India’s dependence on imports of key inputs, including:
- Liquefied Natural Gas (LNG)
- Urea and ammonia
- Methanol and related chemicals
By promoting domestic production of syngas-based products, the initiative aims to strengthen supply chain resilience in critical sectors.
Economic and strategic impact
The programme is expected to:
- Enhance value addition from domestic coal resources
- Promote advanced and indigenous gasification technologies
- Support industrial growth in chemicals and energy sectors
- Generate large-scale employment opportunities
- Strengthen long-term energy security
The government has also extended coal linkage tenure up to 30 years for eligible gasification projects under the non-regulated sector, providing long-term policy stability for investors.
Policy continuity
The scheme builds on the National Coal Gasification Mission (2021) and expands earlier incentive frameworks, reinforcing India’s long-term strategy to promote cleaner and more efficient utilisation of domestic coal resources.
Conclusion
The Cabinet stated that the initiative marks a significant step toward energy independence, industrial development, and employment generation, while improving the efficient use of India’s abundant coal reserves.