India Readies Rs 375 bn Boost For Coal Gasification

07 May 2026 CW Team

The Union Cabinet is preparing to consider a proposal for an incentive scheme worth Rs 375 billion (Rs 375 bn) to promote coal gasification projects across India. The coal ministry has prepared a Cabinet note setting out measures to accelerate development of surface coal and lignite gasification. The scheme is presented as a unified programme that removes multiple support categories and simplifies access to financial assistance for project developers.

The initiative is designed to support cleaner fuel and chemical production and to reduce dependence on imports of liquefied natural gas, urea, ammonium nitrate, ammonia, coking coal used in direct reduced iron, methanol and dimethyl ether. It aims to improve utilisation of domestic coal and lignite resources by converting feedstock into fuels and industrial chemicals. Officials describe the move as part of a broader strategy to shore up energy and industrial feedstock security and to limit exposure to global supply disruptions.

The programme envisages a national capacity target of 100 million tonnes (100 mn t) of coal gasification capacity by 2030. Under the proposal the maximum financial assistance per project would be Rs 30 billion (Rs 30 bn), a marked increase from earlier caps that were Rs 10 billion (Rs 10 bn) for private firms and Rs 13.5 billion (Rs 13.5 bn) for public sector undertakings. Centralised incentives are intended to spur investment at scale and attract technology deployment.

Policymakers expect the scheme to channel domestic resources into production of fuels and chemical feedstocks while supporting employment and industrial activity in coal regions. The plan is framed as a complement to other energy initiatives and is set to be evaluated by the Cabinet before formal approval and implementation details are finalised.

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