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Coal gasification incentive scheme worth ₹37,500cr to be approved soon
03 May 2026

The Union Cabinet is likely to approve a massive ₹37,500 crore incentive scheme for coal gasification projects.

The move is part of India's strategy to boost clean energy production and cut down on import dependence.

The Coal Ministry has already prepared a Cabinet note on the proposed scheme, which seeks to accelerate surface coal and lignite gasification projects across the country.

Proposed scheme aims to reduce dependence on critical commodities
Import reduction

The proposed scheme also aims to reduce India's dependence on critical commodities like LNG, urea, ammonium nitrate, ammonia, coking coal via DRI (Direct Reduced Iron), methanol, and DME (Dimethyl Ether).

It is expected to enhance the utilization of domestic coal and lignite resources for fuels and chemicals production.

The scheme also supports the national target of achieving a coal gasification capacity of 100 million tons by 2030.

New unified scheme offers maximum financial assistance of ₹3,000cr
Financial assistance

The new scheme is a unified one with no categories. It offers a maximum financial assistance of ₹3,000 crore for a single project.

This is a significant jump from the previous financial incentive scheme for gasification projects, which had three categories with maximum incentives of ₹1,000 crore per project for the private sector, and ₹1,350 crore per project for PSUs (Public Sector Undertakings).

Strategic lever for energy security
Energy strategy

The government's renewed focus on coal gasification comes amid recent tensions in West Asia, highlighting India's vulnerability to disruptions in LNG, LPG and other hydrocarbon supplies.

This has underscored the need to diversify the energy feedstock sources.

The government is now positioning coal gasification as a strategic lever to convert domestic coal into fuels and chemicals, lower import dependence, and strengthen energy security amid fragile global supply chains.