New Delhi: The Union Cabinet on Wednesday approved a Rs 37,500-crore incentive scheme for surface coal and lignite gasification projects, in a move, the government said, is aimed at boosting domestic energy production, strengthening energy security and reducing dependence on imports of key industrial inputs.
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Union Information & Broadcasting Minister Ashwini Vaishnaw said the scheme carries “an outlay of Rs 37,500 crore” and is designed around “an investment of around Rs 3,000 lakh crore” for projects that will gasify 75 million tonnes of coal. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi.
Vaishnaw linked the move to the broader geopolitical backdrop, saying, “We all know about the current geopolitical situation. So we have to take all the decisions to become Atma Nirbhar. In this context, a big decision on coal gasification was taken today,” he said.
According to the Ministry of Coal, the scheme is a major step toward India’s target of gasifying 100 million tonnes of coal by 2030. The ministry said the policy is intended to reduce dependence on imported LNG, urea, ammonia, methanol and coking coal, while increasing the domestic use of coal and lignite resources.
The ministry also said the government has 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. It said this is meant to provide long-term policy certainty for project developers.
The scheme has a total financial outlay of Rs 37,500 crore and will incentivise new surface coal and lignite gasification projects for the production of syngas and downstream products.
The ministry said the incentive will be provided at a maximum of 20% of the cost of plant and machinery, with selection through a transparent and competitive bidding process. The financial support will be disbursed in four equal instalments linked to project milestones.
It also set caps of Rs 5,000 crore for any single project, Rs 9,000 crore for any single product other than synthetic natural gas and urea, and Rs 12,000 crore for any single entity group across all projects.
The ministry said the scheme is technology-agnostic, though it will encourage indigenous technologies. It said the policy could mobilise Rs 2.5-3.0 lakh crore in investment and create around 50,000 direct and indirect jobs across 25 projects in coal-bearing regions.
Industry reaction was broadly supportive, with New Era Cleantech Pvt Ltd calling the measure a “bold, timely and strategic intervention” at a time of LNG shortages, fertilizer supply disruptions and volatile energy prices.
The company said India now has a “historic opportunity” to convert domestic coal reserves into fertilizers, methanol, hydrogen, DME, fuels and strategic chemicals, reducing import dependence and reinforcing the vision of Aatmanirbhar Bharat.
New Era Cleantech said it is already part of the government’s existing Rs 8,500 crore coal gasification incentive scheme and has been developing one of India’s largest integrated coal gasification and CCUS projects. It said the new support would accelerate its proposed 5 million tonne coal gasification project in Maharashtra, for which the groundbreaking ceremony was recently performed.
Balasaheb Darade, Founder & Managing Director of New Era Cleantech, said, “The countries that controlled oil shaped the last century. The countries that control clean carbon, hydrogen and strategic molecules will shape the next. India now has the opportunity to lead that transformation.”
He added, “India is sitting on one of the world’s largest coal reserves. The question is no longer whether we use coal — the question is whether we use it intelligently to build national strength, energy independence and industrial resilience.”
Mission Energy Foundation Director General Ashwinkumar Khatri also welcomed the scheme, saying it is a landmark step for clean energy transition, industrial decarbonisation and the use of indigenous energy resources.
“We especially appreciate the visionary leadership and sustained efforts of G Kishan Reddy Ji (coal and mines minister) and the Ministry of Coal in driving strategic policy support for the advancement of the coal gasification ecosystem in India,” Khatri said.
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He added that the initiative should create momentum for investments, technology deployment and infrastructure development across coal gasification, biomass conversion, waste-to-energy, hydrogen, methanol and DME.
“We believe this announcement will further strengthen industry confidence and accelerate collaborative efforts towards a more sustainable and self-reliant energy future,” Khatri said.
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