Union Cabinet Approves Rs37,500 Crore Coal Gasification Scheme

India’s Large Coal Reserves

India has one of the world’s largest coal reserves.

Reserve Details

• Around 401 billion tonnes of coal

• Around 47 billion tonnes of lignite

The government plans to use these resources for value-added industrial production.

Why India is Taking This Step Now

Global geopolitical tensions and supply chain disruptions have increased concerns about energy imports.

Rising international fuel prices and shipping risks have also increased India’s import costs.

India’s import bill for key fuel and chemical products reached around ₹2.77 lakh crore in FY2025.

The government sees coal gasification as a way to reduce this burden.

Link with Atmanirbhar Bharat and Make in India

The scheme supports:

• Atmanirbhar Bharat

• Make in India

The project aims to strengthen domestic manufacturing and reduce foreign dependence.

Financial Incentives Under the Scheme

The government will provide financial support to industries investing in coal gasification projects.

Incentive Structure

• Up to 20% support for plant and machinery cost

• Maximum ₹5,000 crore per project

• Maximum ₹9,000 crore for one product category

• Maximum ₹12,000 crore for one corporate group

The incentives will be released in four stages linked to project progress.

30-Year Coal Linkage Support

A major reform under the scheme is long-term coal supply support.

Industries under the coal gasification sector will receive coal linkage for up to 30 years.

This gives long-term stability to companies investing in large industrial projects.

Earlier Coal Gasification Initiatives

India has already taken several steps in this sector.

Previous Initiatives

• National Coal Gasification Mission launched in 2021

• ₹8,500 crore scheme approved in January 2024

• 8 projects worth ₹6,233 crore already under implementation

The new scheme expands these earlier efforts.