Coal gasification push hits roadblock
The Government of India’s ambitious Rs.37,500 crore financial incentive scheme for the promotion of coal gasification has found no takers so far, according to sources. Despite the September 7 deadline, the scheme has received no application from any private or public player to set up projects under the programme, raising concerns over the viability of the coal ministry’s push to gasify 75 million tonnes of coal and lignite, sources said.
Unless the deadline of September 7 has passed, it would not be possible to state the number of applications since the whole process is online, the coal ministry said in an emailed response, reported news agency PTI. The Ministry has received communication from several industries expressing interest in participating in the scheme, it said.
In a notice, the coal ministry had said that “the Request for Proposal (RFP) dated July 7, 2026, issued under the Rs.37,500 crore financial incentive scheme for promotion of surface coal/ lignite gasification projects, wherein the last date for submission of applications is September 7, 2026.”
It is pertinent to inform that, given the scale of funds involved in coal gasification projects, the preparation of PFRs and project proposals requires time, the ministry said, adding that application rounds are envisaged every two months, providing multiple opportunities for industry participation.
The Union Cabinet had earlier approved the scheme to promote coal gasification projects, aimed at boosting clean energy production and reducing dependence on forex-guzzling imports of LNG, urea, and methanol, while insulating the country from global price volatility and supply chain disruptions.
The Union Cabinet under the chairmanship of Prime Minister Narendra Modi approved the scheme for promotion of surface coal/ lignite gasification projects with a financial outlay of Rs.37,500 crore.
Coal gasification refers to the process of converting dry fuel into synthetic gas (syngas), which is used as an alternative fuel and helps reduce carbon emissions. This process supports the production of methanol, fertilisers, hydrogen and chemicals, cutting reliance on imports.
The scheme marks a major step towards accelerating the country’s coal gasification programme, strengthening energy security, and reducing dependence on imports of key products such as LNG, urea, ammonia and methanol. India holds one of the world’s largest coal reserves of 401 billion tonnes and lignite reserves of 47 billion tonnes.
Coal accounts for over 55 percent of the country’s energy mix. Gasification converts coal/ lignite into 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.
India’s import bill for key substitutable products, such as LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME, and others, stood at approximately Rs.2.77 lakh crore in FY25, a vulnerability further exposed by the ongoing geopolitical situation in West Asia.
The incentive builds on the National Coal Gasification Mission (2021) and a Rs.8,500 crore scheme approved in January 2024, under which eight projects worth Rs.6,233 crore are under implementation.
[with PTI inputs]
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