The Union Cabinet is expected to soon clear a Rs 37,500 crore incentive scheme to promote coal gasification projects aimed at boosting clean fuel production and cutting India’s dependence on imported hydrocarbons, sources said.
The coal ministry has prepared a Cabinet note outlining the scheme with a total financial outlay of Rs 37,500 crore, which is designed to accelerate surface coal and lignite gasification projects across the country.
It seeks to promote self-reliance by reducing import dependence on critical commodities such as liquefied natural gas, ammonia, urea, ammonium nitrate, methanol and dimethyl ether, while encouraging higher utilisation of domestic coal resources.
The scheme also supports the national target of achieving 100 million tonnes of coal gasification capacity by 2030, positioning coal conversion as a key pillar of India’s long-term energy transition strategy.
According to officials, the proposed scheme is unified in structure with no categories and provides a maximum financial assistance of Rs 3,000 crore for a single project, significantly higher than earlier incentive limits.
Under the earlier incentive framework, the government had extended support across three categories, with the highest assistance capped at Rs 1,000 crore for private projects and Rs 1,350 crore for public sector undertakings.
Industry analysts said the renewed push for coal gasification comes amid recent geopolitical tensions in West Asia, which have exposed vulnerabilities in India’s energy supply chain, particularly in LNG and LPG imports.
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The initiative is being viewed as a strategic move to diversify energy feedstock sources, reduce exposure to global supply shocks and strengthen domestic energy security through the conversion of coal into cleaner fuels and chemicals.
India holds one of the world’s largest coal reserves at about 401 billion tonnes, giving it a unique opportunity to leverage domestic resources for import substitution and industrial expansion.
Coal currently accounts for over 55 per cent of India’s energy mix, and the government expects its consumption to remain significant as energy demand continues to rise with economic growth.
Coal gasification enables the conversion of coal into syngas, which can be used for producing chemicals, petrochemicals, fertilisers, power, methanol, ammonia and direct reduced iron, offering a pathway for cleaner utilisation of domestic coal.
This push also aligns with India’s broader strategy of enhancing energy independence while supporting industrial value addition within the country.
Officials believe that scaling up coal gasification will not only help stabilise fuel supplies in volatile global markets but also create new opportunities in chemicals and fertiliser production, while supporting employment generation and reducing import bills over the long term.
The Cabinet note is expected to be taken up shortly for approval as the government looks to fast-track implementation of the scheme across key coal-bearing states. India now.
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