The Union Cabinet has approved a ₹37,500 crore incentive scheme to accelerate domestic coal gasification projects, a move aimed at strengthening India’s energy security and reducing dependence on imported fuels and chemicals.
The scheme is designed to support India’s target of gasifying 100 million tonnes of coal by 2030 while promoting cleaner utilisation of the country’s vast coal reserves.
According to the government, the initiative is expected to reduce imports of products such as LNG, ammonia, methanol, and urea by encouraging domestic production through coal gasification technologies.
As part of the policy push, the government has also extended coal linkage tenure to 30 years under the “Production of Syngas leading to Coal Gasification” category within the Non-Regulated Sector linkage auction framework.
The long-term linkage support is expected to improve investor confidence and provide greater policy stability for large-scale projects.
Under the approved scheme:
- Financial incentives of up to 20% of plant and machinery costs will be provided for eligible coal and lignite gasification projects
- The programme targets gasification of nearly 75 million tonnes of coal and lignite
- Projects will be selected through a competitive bidding process based on project cost, coal input, and syngas output
The government said incentives will be disbursed in four equal instalments linked to project milestones.
Financial assistance under the scheme has also been capped to prevent concentration:
- Maximum support per project: ₹5,000 crore
- Maximum support for a single product category (except synthetic natural gas and urea): ₹9,000 crore
- Maximum cumulative support for one corporate group: ₹12,000 crore
The scheme will remain technology-agnostic, though the government said indigenous technologies would receive encouragement.
The incentive programme will operate in addition to benefits already available under commercial coal mining policies and other state or central government schemes.
Earlier, NITI Aayog highlighted in its Scenarios Towards Viksit Bharat and Net Zero report that India’s large coal reserves, combined with carbon capture utilisation and storage (CCUS) technologies, could create opportunities for cleaner coal utilisation pathways.
The government estimates the initiative could mobilise investments worth ₹2.5–3 trillion and generate nearly 50,000 direct and indirect jobs across approximately 25 projects, particularly in coal-bearing regions.
The policy comes amid India’s broader push to balance energy transition goals with energy security requirements while reducing dependence on imported energy inputs and industrial feedstock.
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