Cabinet Approves Rs 37,500 Crore Coal Gasification Scheme to Create 50,000 Jobs

The scheme is projected to create around 50,000 (direct and indirect) jobs across 25 projects in coal-bearing regions, according to an official statement.

In a significant accompanying reform, the government has also extended coal linkage tenure up to 30 years under the "Production of Syngas leading to Coal Gasification" sub-sector in the Non-Regulated Sector (NRS) linkage auction framework, providing long-term policy certainty for investment in coal gasification projects.

The scheme marks a major step towards accelerating India's coal/lignite gasification programme, advancing the national target of gasifying 100 million tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG (more than 50 per cent imported), urea (20 per cent imported), ammonia (100 per cent imported), and methanol (80-90 per cent imported).

The scheme aims to incentivise new surface coal/lignite gasification projects for the production of syngas and its downstream products, targeting the gasification of approximately 75 million tonnes of coal/lignite.

Other features include financial incentives provided at a maximum of 20 per cent of the cost of plant and machinery; selection through a transparent and competitive bidding process, with an evaluation framework benchmarking project cost, coal input, and syngas output; and incentives disbursed in four equal instalments, linked to project milestones.

"Financial incentive for any single project capped at Rs 5,000 crore; for any single product (except Synthetic Natural Gas and Urea) capped at Rs.9,000 crore; and any single entity group capped at Rs.12,000 crore across all projects," said the official statement.

Coal/lignite utilisation is expected to generate Rs 6,300 crore annually from 75 million tonnes of gasification envisaged under the scheme, plus downstream revenue from GST and other levies.

India holds one of the world's largest coal reserves (401 billion tonnes) and lignite reserves (47 billion tonnes). Coal accounts for over 55 per cent of the country's energy mix.

According to the statement, India's import bill for key substitutable products -- LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others -- stood at approximately Rs 2.77 lakh crore in FY25, a vulnerability further exposed by the ongoing geopolitical situation in West Asia.

Building on the National Coal Gasification Mission (2021) and a Rs 8,500 crore scheme approved in January 2024 (under which eight projects worth Rs 6,233 crore are under implementation), the new scheme builds on this momentum with significantly enhanced support.

- IANS