The Ministry of Coal has launched a comprehensive ₹37,500-crore coal gasification scheme with a competitive bidding framework to accelerate domestic coal utilization and reduce import dependence. According to reports from Business Standard, the scheme provides financial assistance of up to 20 per cent of the cost of eligible plant and machinery, with bids seeking lower percentage of financial incentives receiving higher evaluation scores under prescribed criteria.
The government has implemented strict financial caps to prevent concentration of incentives, with ₹5,000 crore maximum assistance for any single project and ₹12,000 crore for any corporate group, including holding, subsidiary and associate companies. As reported by Business Standard, incentives for individual downstream products have been capped at ₹9,000 crore, except for urea and synthetic natural gas (SNG) projects. The scheme aims to support projects capable of gasifying around 75 million tonnes of coal and lignite, contributing to India's target of 100 MT coal gasification by 2030.
The initiative targets products with an estimated import bill of ₹2.77 trillion in FY25, including methanol, ammonia, synthetic natural gas, hydrogen, fertilizers and other chemicals. According to Business Standard, the Centre expects the scheme to attract investments of ₹2.5-3 trillion across nearly 25 projects, while the government estimates that products potentially substituted through coal gasification accounted for an import bill of about ₹2.77 trillion in FY25.
The scheme prescribes strict implementation milestones with four instalments of incentives linked to project progress. As reported by Business Standard, the first instalment of 25 per cent will be released only after developers secure land, environmental clearance, coal linkage, technology tie-ups, appointment of an engineering, procurement and construction (EPC) contractor, and financial closure from banks. Projects missing commissioning deadlines face financial penalties, with developers commissioning projects between five and six years receiving only half of remaining incentives, and those between six and seven years receiving only one-fourth.
The ministry has adopted a technology-neutral approach, allowing developers to choose any commercially viable gasification technology suitable for Indian coal while encouraging indigenous technologies. According to Business Standard, the scheme permits flexibility in choosing downstream products for manufacturing, covering a wide range of syngas derivatives instead of limiting support to a predefined list. To oversee implementation, the Centre has constituted an Empowered Group of Secretaries chaired by the Expenditure Secretary, along with a Special Task Force under the Ministry of Coal and a Project Management Agency to monitor project execution and verify expenditure claims.
