Cabinet Approves Surface Coal Gasification Promotion Scheme

15 May 2026 CW Team

The Cabinet has approved a Scheme for Promotion of Surface Coal and Lignite Gasification Projects with a total financial outlay of Rs.375,000 million (mn) to incentivise new surface gasification facilities aimed at producing synthesis gas and downstream products. The scheme targets gasification of approximately 75 million (mn) tonnes (t) of coal and lignite and is technology agnostic while encouraging indigenous solutions.

Financial support will be provided up to a maximum of 20 per cent of the cost of plant and machinery and will be disbursed in four equal instalments tied to project milestones through a transparent competitive bidding process. Evaluation criteria will benchmark project cost, coal input and syngas output and incentives are additional to benefits under commercial coal mining and other central and state schemes.

Incentive caps are set at Rs.50,000 million (mn) for any single project, Rs.90,000 million (mn) for any single product other than synthetic natural gas and urea, and Rs.120,000 million (mn) for any single entity group across projects. The government has indicated potential investment mobilisation of Rs.2,500,000 million to Rs.3,000,000 million (mn) and the scheme is projected to generate around 50,000 direct and indirect jobs across 25 projects in coal bearing regions.

Annual receipts from coal and lignite utilisation are expected at Rs.63,000 million (mn) from the envisaged 75 million (mn) tonnes (t) of gasification with additional downstream revenue from taxes. India holds about 401 billion (bn) tonnes (t) of coal and 47 billion (bn) tonnes (t) of lignite, and the scheme builds on the National Coal Gasification Mission and an earlier Rs.85,000 million (mn) initiative approved in January 2024 under which eight projects worth Rs.62,330 million (mn) are under implementation.

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