India holds one of the world’s largest coal reserves (401 billion tonnes) and lignite reserves (47 billion tonnes), according to a statement.
Coal accounts for over 55 per cent of the country’s energy mix. Gasification converts coal/lignite into ‘synthesis gas’ (syngas), a versatile feedstock for producing fuels and chemicals domestically, enabling India to substitute high-value imports and insulate itself from global supply disruptions and price volatility, it added.
India’s import bill for key substitutable products LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others stood at approximately Rs.2.77 lakh crore in FY2025, a vulnerability further exposed by the ongoing geopolitical situation in West Asia, the official statement said.
The Scheme marks a major step towards accelerating India’s coal/lignite gasification programme, advancing the national target of gasifying 100 Million Tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG (more than 50 per cent imported), urea (20 per cent imported), ammonia (100 per cent imported), and methanol (80–90 per cent imported).
The Government has also extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector in the Non-Regulated Sector (NRS) linkage auction framework, providing long-term policy certainty for investment in coal gasification project.
The scheme will incentivize new surface coal/lignite gasification projects for production of syngas and its downstream products, targeting gasification of approximately 75 Million Tonne of coal/lignite.
A financial incentive of up to 20 per cent of the cost of plant and machinery will be provided. Incentive will be disbursed in four equal instalments, linked to project milestones.
For any single project the incentive is capped at Rs 5,000 crore, while for any single product excluding synthetic natural gas and urea it is capped at Rs 9,000 crore.
For any single entity group the incentive is capped at Rs. 12,000 crore across all projects.
Incentive under the scheme is in addition to, and does not restrict access to, incentives under the commercial coal mining regime or schemes of other Central/State Government ministries. The Scheme is technology-agnostic; adoption of indigenous technologies is encouraged, the government said.
The scheme aims to mobilize Rs.2.5- 3.0 lakh crore investment.
The scheme will lead to diversified use of coal resources and substitutes imports of LNG, urea, ammonia, ammonium nitrate, methanol, and coking coal, insulating India from global price volatility and geopolitical supply-chain disruptions and advancing the Atmanirbhar Bharat and Make in India objectives.
The Scheme is projected to create around 50,000 (Direct + Indirect) jobs across 25 projects in coal-bearing regions.
Coal/lignite utilization is expected to generate Rs.6,300 crore annually from 75 Million Tonne of gasification envisaged under the scheme, plus downstream revenue from GST and other levies.
The scheme also boosts India’s domestic surface coal gasification capability by advancing indigenous technologies and minimising reliance on foreign EPC contractors.
