Cabinet Approves ₹37,500 Crore Coal Gasification Promotion Scheme

New Delhi, May 14, 2026: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Scheme for Promotion of Surface Coal/Lignite Gasification Projects with a financial outlay of ₹37,500 crore.

The scheme aims to accelerate India’s coal gasification programme and support the national target of gasifying 100 million tonnes of coal by 2030. It is also expected to strengthen energy security and reduce dependence on imports of products such as LNG, urea, ammonia, methanol, and coking coal.

According to the government, the scheme will incentivise new surface coal and lignite gasification projects for the production of syngas and downstream products, targeting the gasification of around 75 million tonnes of coal and lignite. Financial incentives of up to 20% of the plant and machinery cost will be provided through a competitive bidding process.

The Cabinet has also approved the extension of coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector in the Non-Regulated Sector linkage auction framework. The move is intended to provide long-term policy certainty for investors.

Under the scheme, the incentive for any single project will be capped at ₹5,000 crore, while incentives for any single product category, except synthetic natural gas and urea, will be limited to ₹9,000 crore. The total incentive for a single entity group across projects will be capped at ₹12,000 crore.

The government said the initiative is expected to mobilise investments worth ₹2.5 lakh crore to ₹3 lakh crore and generate nearly 50,000 direct and indirect jobs across around 25 projects in coal-bearing regions.

The scheme is technology-agnostic, though the use of indigenous technologies has been encouraged. Incentives under the programme will also remain separate from benefits available under commercial coal mining policies or other central and state government schemes.

India currently holds around 401 billion tonnes of coal reserves and nearly 47 billion tonnes of lignite reserves. Coal contributes over 55% to the country’s energy mix. The government noted that India’s import bill for LNG, ammonia, methanol, coking coal, urea and related products stood at approximately ₹2.77 lakh crore in FY2025.

The newly approved scheme builds on the National Coal Gasification Mission launched in 2021 and the earlier ₹8,500 crore coal gasification support scheme approved in January 2024.