Coal gasification projects with a combined capacity of 22.6 million tonnes per annum (MTPA) are currently operational or under implementation, according to Minister of State for Coal Satish Chandra Dubey's written reply in Parliament. The projects include 8 MTPA capacity being set up by Jindal Steel Limited (JSL) and 2.6 MTPA capacity being established by Talcher Fertilisers Limited (TFL). Additionally, eight projects with a combined capacity of 12 MTPA have been approved under the ₹8,500 crore financial incentive scheme.
In May 2026, the government approved a new scheme for promoting surface coal and lignite gasification projects with a financial outlay of ₹37,500 crore. As reported by Business Standard, this new scheme is expected to utilise approximately 75 MTPA of coal and substantially contribute towards achieving the national target of 100 MT coal and lignite gasification. The new scheme provides financial incentives of up to 20% of the eligible plant and machinery cost for coal and lignite gasification projects, compared to the previous scheme's 15% financial incentive on capital expenditure. The earlier ₹8,500 crore scheme, approved on January 24, 2024, provided eligible projects with financial assistance of 15% of capital expenditure (CapEx), subject to prescribed limits.
The government has strengthened the incentive framework under the new scheme to attract greater investment in coal gasification projects. According to the minister's statement, the government is promoting the production of coal-to-chemicals, methanol and synthetic natural gas through coal gasification by providing financial incentives, facilitating coal availability, strengthening regulatory support, simplifying approvals, promoting indigenous technologies, and creating an enabling policy framework to strengthen India's energy security. These initiatives are aimed at enhancing India's energy security, promoting value-added utilisation of domestic coal resources, and supporting the country's long-term industrial and clean energy transition.
The Ministry of Coal successfully conducted the Pre-Application Conference for the ₹37,500 crore Scheme on July 20, 2026, under the chairmanship of Shri Sanoj Kumar Jha, Additional Secretary, MoC. The conference witnessed enthusiastic participation from public sector enterprises, private companies, technology providers, and other stakeholders. The Ministry provided detailed clarifications on the Scheme Guidelines and Request for Proposal (RFP), covering eligibility criteria, evaluation methodology, financial incentives, and the application process. The last date for submission of applications is September 7, 2026, and the Ministry has encouraged all eligible entities to submit their proposals within the prescribed timeline. The scheme is expected to catalyse investments of around ₹2.5–3 lakh crore, facilitate utilisation of nearly 75 million tonnes of coal annually, generate about 50,000 employment opportunities, and significantly reduce India's dependence on imports of energy and chemical products.
