Cabinet Set to Clear ₹37,500 Cr Coal Gasification Plan

• Cabinet to approve ₹37,500 crore coal gasification scheme
• Aims to reduce imports of fuels and chemicals
• Offers up to ₹3,000 crore support per project

The Union Cabinet is set to approve a ₹37,500 crore incentive scheme to promote coal gasification projects, marking a major push toward cleaner coal utilisation and reduced import dependence in India’s energy ecosystem.

The proposal, prepared by the Ministry of Coal, aims to accelerate surface coal and lignite gasification projects across the country. The initiative is designed to convert domestic coal into synthetic gas (syngas), which can be used for producing fuels, fertilisers, and chemicals, thereby expanding the value chain of India’s vast coal reserves.

A key objective of the scheme is to reduce reliance on imports of critical commodities such as LNG, urea, ammonia, methanol, and coking coal. By substituting imports with domestically produced alternatives, the government aims to strengthen energy security and improve trade balance.

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The scheme introduces a unified incentive structure, replacing earlier category-based frameworks. It also significantly enhances financial support, offering up to ₹3,000 crore per project, compared to lower caps in previous schemes. This is expected to improve project viability and attract larger private and public investments into the sector.

Strategically, the initiative aligns with India’s long-term target of achieving 100 million tonnes of coal gasification capacity by 2030, positioning gasification as a key pillar in the country’s energy transition strategy.

The move also comes amid global supply uncertainties and geopolitical tensions, which have highlighted vulnerabilities in energy imports. By leveraging its abundant coal reserves, India is aiming to build a more self-reliant and resilient energy ecosystem while simultaneously supporting cleaner fuel alternatives compared to direct coal combustion.

Overall, the proposed ₹37,500 crore scheme represents a significant scale-up from earlier initiatives and signals a strong policy push toward coal-to-chemicals and coal-to-fuels transformation, balancing energy security with sustainability goals.