Govt Approves Rs 37,500-Crore Scheme To Boost Coal Gasification

New Delhi, May 13 (KNN) The Union Cabinet, chaired by Prime Minister Modi, has approved a Rs 37,500-crore scheme to promote surface coal and lignite gasification projects, according to the Ministry of Coal.

In a press release the ministry said the initiative aims to accelerate India’s coal gasification programme and support the national target of gasifying 100 million tonnes of coal by 2030, while enhancing energy security and reducing reliance on imports of key commodities such as LNG, urea, ammonia and methanol.

Policy Push and Long-Term Support

As part of the reform package, the government has extended coal linkage tenure up to 30 years under the ‘Production of Syngas leading to Coal Gasification’ category in the Non-Regulated Sector (NRS). This is expected to provide long-term policy certainty and encourage private investment in the sector.

Key Features of the Scheme

The scheme seeks to incentivise new gasification projects with a total outlay of Rs 37,500 crore, targeting gasification of around 75 million tonnes of coal and lignite.

Financial support will cover up to 20 per cent of plant and machinery costs, with a cap of Rs 5,000 crore per project. Additional caps include Rs 9,000 crore per product (excluding synthetic natural gas and urea) and Rs 12,000 crore per entity group across projects.

Projects will be selected through a competitive bidding process, with incentives disbursed in four instalments linked to project milestones. The scheme is technology-agnostic, though it encourages the use of indigenous technologies.

Economic and Strategic Impact

The government expects the scheme to mobilise investments worth Rs 2.5–3 lakh crore. It is also projected to generate around 50,000 direct and indirect jobs across 25 projects, particularly in coal-bearing regions.

By enabling the production of syngas and downstream products, the initiative aims to reduce import dependence and shield the economy fr0m global price volatility and supply disruptions.

Additionally, coal and lignite utilisation under the scheme is estimated to generate annual revenues of about Rs 6,300 crore, along with further gains through GST and other levies.

(KNN Bureau)