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Informist, Wednesday, May 13, 2026

 

--Cabinet OKs INR 375 billion for coal gasification scheme 

--Govt: Targeting coal, lignite gasification of 75 mln tn under new scheme 

 

NEW DELHI – The Union Cabinet Wednesday approved a new coal gasification scheme with a financial outlay of INR 375 billion, aimed at strengthening energy security, and reducing dependence on imports of key products such as liquefied natural gas, the government said. The government expect investment mobilisation of INR 2.5 trillion to INR 3 trillion from the scheme.

 

The scheme for promotion of surface coal and lignite gasification projects is expected to accelerate India's coal and lignite gasification programme, advancing the national target of gasifying 100 million tonnes of coal by 2030. The government is targeting gasification of approximately 75 million tonnes of coal and lignite under the new scheme.

 

The scheme, the government said, targets "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." All plants under the scheme will be operational in four to five years, the government said. 

 

Coal and lignite utilisation is expected to generate INR 63 billion annually from 75 million tonnes of gasification envisaged under the scheme, plus downstream revenue from goods and services tax and other levies, the government said. It will also create 50,000 jobs across 25 projects in coal-bearing regions. 

 

Financial incentive for any single project is capped at INR 50 billion. For any single product (except synthetic natural gas and urea), the incentive is capped at INR 90 billion, and for any single entity group it is capped at INR 120 billion across all projects.

 

India holds one of the world's largest coal reserves of around 401 billion tonnes, and lignite reserves of arond 47 billion tonnes. Coal accounts for over 55% 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," the government said.

 

India's import bill for key substitutable products such as liquefied natural gas, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others stood at approximately INR 2.77 trillion in 2024-25 (Apr-Mar), a vulnerability further exposed by the ongoing geopolitical situation in West Asia, the government said.  End

 

Reported by Shubham Rana

Edited by Tanima Banerjee

 

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