The Cabinet may soon approve an incentive scheme of Rs 37,500 crore to promote coal gasification projects. The objective of this scheme is to promote clean energy production and reduce dependence on imports. According to sources, the Coal Ministry has already prepared a cabinet note for this scheme to promote coal gasification projects, the financial outlay of which is Rs 37,500 crore. The objective of this proposed scheme is to accelerate surface coal and lignite gasification projects across the country.
Along with this, it aims to promote self-reliance by reducing import dependence of important commodities like LNG, Urea, Ammonium Nitrate, Ammonia, coking coal, methanol and DME through DRI. The scheme enables better utilization of domestic coal and lignite resources for the production of fuels and chemicals, and supports the national target of 100 million tonnes of coal gasification capacity by 2030.
He said that this is an integrated scheme in which there is no category division, and the maximum financial assistance for any one project is Rs 3,000 crore. Sources said that in the previous financial incentive scheme for gasification projects, the government had provided financial assistance under three categories. This included incentives of a maximum of Rs 1,000 crore per project for the private sector and Rs 1,350 crore per project for public sector undertakings (PSUs). According to an industry analyst, this new push by the government for coal gasification comes after the recent tensions in West Asia. This tension has exposed the country's vulnerability to disruptions in the supply of LNG, LPG and other hydrocarbons, emphasizing the need to diversify energy sources.
The government is now presenting coal gasification as a strategic means to transform domestic coal into fuels and chemicals, reduce import dependence, and strengthen energy security—especially at a time when global supply chains remain fragile. India has huge coal reserves of 401 billion tonnes, putting it in a unique position to leverage domestic resources to reduce import dependence and build a clean, strong energy economy.
Coal remains the backbone of India's energy sector, contributing more than 55 percent to the country's total energy mix. As the second largest producer and consumer of coal globally, India's coal consumption is expected to increase significantly as its energy demands continue to grow. Gasification presents a unique opportunity for India to take full advantage of its vast domestic reserves by converting coal into 'syngas', in a clean and efficient manner. This process enables domestic production of syngas or other products derived from it – such as chemicals, petrochemicals, fertilizers, electricity and DRI.
