Cabinet Likely To Approve ₹37,500 Crore Coal Gasification Scheme

India is preparing a much bigger push into coal gasification. The Union Cabinet is expected to soon approve a ₹37,500 crore incentive scheme to accelerate coal gasification projects across the country. The Coal Ministry has already prepared a Cabinet note for approval, according to government sources.

This could benefit companies across the coal and engineering ecosystem in India. Companies like Coal India Limited, Bharat Heavy Electricals Limited, and fertiliser firms or those involved in gasification infrastructure will be in focus after this announcement.

A Major Jump From The Previous Scheme

This new proposal is significantly larger than the government’s earlier incentive programme. In January 2024, the Centre had approved an ₹8,500 crore incentive scheme for coal gasification projects. That earlier scheme covered three categories, ₹4,050 crore for PSU projects, ₹3,850 crore for private sector + PSU projects and ₹600 crore for demonstration projects.

Now, the government is proposing a much bigger ₹37,500 crore unified scheme with no separate categories, a simpler structure and bigger capital support. Under the previous scheme, private companies could receive up to ₹1,000 crore per project and PSUs could receive up to ₹1,350 crore per project. But a single project can now receive up to ₹3,000 crore in financial assistance.

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Why India Is Pushing This Now

The timing of this move is not accidental. Recent tensions in West Asia have once again highlighted how dependent India is on energy imports. India still imports several key products such as LNG, urea, ammonia, ammonium nitrate, methanol, dimethyl ether (DME), and coking coal used in steelmaking. Any disruption in global supply can quickly create problems at home.

That’s why India is now focusing on building domestic capacity. The bigger goal is to create 100 million tonnes of coal gasification capacity by 2030. It’s a big target, especially since the sector is still in its early stages. Projects approved under the 2024 scheme have been given a seven-year timeline, with deadlines going up to 2030–31, which means execution will now be key.

India also has the resources to support this push. The country has around 401 billion tonnes of coal reserves. Coal still makes up more than 55% of India’s energy mix, and India is already the world’s second-largest producer and consumer of coal. That gives policymakers a strong domestic base to work with.

Sources:

The Economic Times

The Hindu