1. Introduction

The initiative is aimed at accelerating India’s coal gasification programme and supporting the national target of gasifying 100 million tonnes (MT) of coal by 2030.

Coal gasification is a process that converts coal into synthesis gas, or syngas, which can be used to produce fuels, fertilizers, methanol, ammonia, and other chemicals. The government believes this technology can help India use its large coal reserves in a cleaner and more efficient manner while reducing dependence on imported energy products.

India currently imports over 50% of its LNG requirement, nearly 20% of urea, almost 100% of ammonia, and around 80–90% of methanol demand. Rising global energy prices and geopolitical tensions have highlighted the risks of depending heavily on imports. The new scheme is therefore being viewed as an important step toward strengthening India’s energy security and industrial self-reliance.

2. Origin and Intent

The scheme comes at a time when global energy markets remain unstable due to conflicts in the Middle East and disruptions in supply chains. India, which is the world’s second-largest coal producer, has been looking for ways to diversify the use of coal beyond power generation.

India possesses around 401 billion tonnes of coal reserves and about 47 billion tonnes of lignite reserves. Despite the rapid growth of renewable energy, coal still contributes more than half of India’s electricity generation. The government’s strategy is to use coal in cleaner and more value-added forms instead of relying only on direct combustion.

Several countries, including the United States and China, are also investing in coal gasification technologies to balance energy security with emission reduction goals. China, in particular, has developed large coal-to-chemical industries using gasification technology.

The new scheme builds upon the National Coal Gasification Mission launched in 2021 and the earlier Rs.8,500 crore incentive scheme approved in January 2024. Under the previous programme, eight projects worth Rs.6,233 crore are already under implementation. According to Union Minister Ashwini Vaishnaw, the latest initiative is expected to attract investments of nearly Rs.3 lakh crore.

3. Key Amendments

• The government will provide financial assistance covering around 20% of the cost of plant and machinery for eligible projects. 
• The scheme has a total financial outlay of Rs.37,500 crore to promote new surface coal and lignite gasification projects for the production of syngas and downstream products. 
• The programme targets gasification of nearly 75 million tonnes of coal and lignite, contributing significantly to the national goal for 2030. 
• Projects will be selected through a transparent and competitive bidding process. Evaluation will be based on factors such as project cost, coal input, and syngas output. 
• The scheme is technology-agnostic, allowing companies to adopt different technologies. However, the use of indigenous technologies has been encouraged to strengthen domestic capabilities. 
• Public sector enterprises and private companies are both expected to participate in the programme, with firms such as Coal India Limited likely to play an important role. 

4. Impact

The Coal Gasification Scheme is expected to deliver major economic and industrial benefits. One of the biggest advantages will be the reduction in imports of LNG, methanol, ammonia, urea, and coking coal. This can help India save foreign exchange and reduce exposure to global price volatility.

The government estimates that the scheme could generate around 50,000 direct and indirect jobs across nearly 25 projects, particularly in coal-bearing states such as Jharkhand, Odisha, and Chhattisgarh. Annual revenue generation from coal and lignite utilisation under the scheme is projected to reach about Rs.6,300 crore, apart from additional GST and industrial revenues.

The initiative is also expected to strengthen India’s domestic technological ecosystem by encouraging indigenous coal gasification technologies and reducing dependence on foreign engineering contractors.

From an environmental perspective, gasification is considered cleaner than direct coal burning because it allows better control of emissions and supports carbon capture technologies. However, experts have also pointed out that coal-based projects must be balanced carefully with India’s long-term renewable energy and climate goals.

5. Conclusion

The Coal Gasification Scheme represents a major step in India’s efforts to strengthen energy security and reduce dependence on imports. By converting domestic coal into fuels, chemicals, and fertilizers, the government aims to create a more self-reliant industrial ecosystem while generating jobs and investments.

Although challenges related to costs and environmental sustainability remain, the initiative could transform the way India uses its vast coal resources. If implemented effectively, the scheme may play an important role in supporting industrial growth, improving energy resilience, and advancing the goals of Atmanirbhar Bharat and Make in India.