Centre to approve Rs 37,500 crore scheme for coal gasification

New Delhi: The Centre is set to approve a Rs 37,500 crore incentive scheme to promote coal and lignite gasification projects across the country, with the aim of reducing India’s dependence on imported LNG, urea, ammonia, and other critical hydrocarbons.

The unified scheme, prepared by the Coal Ministry, will provide a maximum financial incentive of up to Rs 3,000 crore per project.

This is a substantial increase from the earlier scheme, which offered a maximum of Rs 1,000 crore for private sector projects and Rs 1,350 crore for public sector undertakings (PSUs).

The initiative seeks to accelerate domestic production of fuels and chemicals by converting India’s vast coal reserves — estimated at 401 billion tonnes — into valuable products such as syngas, methanol, dimethyl ether (DME), urea, ammonium nitrate, ammonia, and direct reduced iron (DRI).

It is also intended to help achieve the national target of 100 million tonnes of coal gasification capacity by 2030. Recent conflicts in West Asia have exposed vulnerabilities in India’s LNG, LPG, and hydrocarbon supply chains.

In response, the government is positioning coal gasification as a strategic tool to diversify energy feedstocks, enhance self-reliance, and strengthen energy security against global disruptions.

Coal gasification is a thermochemical process that converts coal or lignite into syngas (a mixture of carbon monoxide and hydrogen) rather than burning it directly.

The syngas can then be used to produce chemicals, fertilisers, fuels, power, and steelmaking inputs.

It is viewed as a cleaner and more versatile alternative to traditional coal combustion, enabling higher-value utilisation of domestic resources while supporting economic growth and energy independence.