India approves ₹37,500 crore plan to turn coal into cleaner fuel and cut imports

The scheme aims to accelerate India’s coal and lignite gasification programme and support the national target of gasifying 100 million tonnes of coal by 2030.The government said the scheme will incentivise new surface coal and lignite gasification projects for production of syngas and downstream products, targeting gasification of around 75 million tonnes of coal and lignite.Financial incentives of up to 20% of plant and machinery costs will be provided through a competitive bidding process. Incentives for a single project will be capped at ₹5,000 crore, for any single product (except Synthetic Natural Gas and Urea) capped at ₹9,000 crore; and any single entity group capped at ₹12,000 crore across all projects.The Cabinet also approved extension of coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector in the Non-Regulated Sector linkage auction framework.According to the government, the scheme is expected to mobilise investments of ₹2.5 lakh crore to ₹3 lakh crore and generate around 50,000 direct and indirect jobs across 25 projects in coal-bearing regions.Government added that Coal/lignite utilization is expected to generate ₹6,300 crore annually from 75 Million Tonne of gasification envisaged under the Scheme, plus downstream revenue from GST and other levies.India’s import bill for key substitutable products LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others stood at approximately ₹ 2.77 lakh crore in FY2025, a vulnerability further exposed by the ongoing geopolitical situation in West Asia.The government said the scheme will help reduce dependence on imports of LNG, urea, ammonia, methanol and other products, while strengthening domestic coal gasification capability and supporting indigenous technologies.India holds around 401 billion tonnes of coal reserves and around 47 billion tonnes of lignite reserves, while coal accounts for over 55% of the country’s energy mix.Also Read: Coal gasification to increase in scale as big companies express interest to expand operationsThe government said the new scheme builds on the National Coal Gasification Mission launched in 2021 and the ₹8,500 crore scheme approved in January 2024, under which eight projects worth ₹6,233 crore are currently under implementation.

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