The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a scheme worth Rs 37,500 crore to boost surface coal/lignite gasification projects. This initiative is expected to generate approximately 50,000 jobs directly and indirectly through 25 projects in coal-rich areas. Additionally, the government has extended the coal linkage tenure up to 30 years in the Non-Regulated Sector (NRS) linkage auction framework to provide stability for investments in coal gasification projects.
The scheme represents a significant move towards expediting India’s coal/lignite gasification program, aligning with the national goal of gasifying 100 million tonnes of coal by 2030. It aims to enhance energy security, reduce reliance on imported products like LNG, urea, ammonia, and methanol. The scheme seeks to incentivize new surface coal/lignite gasification projects for producing syngas and its downstream products, targeting the gasification of around 75 million tonnes of coal/lignite.
Key features of the scheme include financial incentives of up to 20% of the plant and machinery cost, selection through a competitive bidding process, and incentives disbursed in four equal installments tied to project milestones. The financial incentive for a single project is capped at Rs 5,000 crore, while for a single product (excluding Synthetic Natural Gas and Urea), it is capped at Rs 9,000 crore. The coal/lignite utilization is projected to yield an annual revenue of Rs 6,300 crore from the envisaged 75 million tonnes of gasification under the scheme, along with downstream revenue from GST and other levies.
India, possessing vast coal and lignite reserves, aims to leverage these resources to meet its energy needs. The country’s import bill for key substitutable products in FY25 amounted to approximately Rs 2.77 lakh crore, underlining the importance of reducing import dependence. This scheme builds on the National Coal Gasification Mission (2021) and a previous Rs 8,500 crore initiative approved in January 2024, further strengthening support for coal gasification projects.
