India, May 04 : India is preparing to take a major step towards strengthening its energy security and industrial self-reliance, with the Union Cabinet expected to soon approve a massive ₹37,500 crore incentive programme aimed at accelerating coal gasification projects across the country.
According to sources, the Ministry of Coal has already finalized a Cabinet note for the proposed financial support mechanism, which is designed to encourage the establishment of large-scale surface coal and lignite gasification facilities. The initiative is part of the government’s broader strategy to reduce India’s reliance on imported energy resources and industrial feedstocks while increasing the value derived from domestic coal reserves.
The proposed scheme is expected to play a central role in India’s clean energy transition by converting coal into synthetic gas, also known as syngas, which can be used for producing fuels, chemicals, fertilizers, and industrial raw materials.
Cabinet Likely to Clear Mega Energy Proposal Soon
Officials familiar with the development stated that the upcoming incentive programme has been structured as a unified scheme without separate categories for public and private sector companies. Under the proposed framework, a single project could receive financial assistance of up to ₹3,000 crore.
This marks a significant increase compared to the earlier coal gasification incentive programme, where private sector projects were eligible for support of up to ₹1,000 crore while public sector undertakings could receive up to ₹1,350 crore.
The government believes the revised and larger incentive structure will encourage greater participation from both domestic and international investors interested in coal-to-chemicals and clean fuel technologies.
Scheme Aims to Reduce Dependence on Imported Fuels
The main objective of the proposed programme is to reduce India’s growing dependence on imported hydrocarbons and industrial inputs such as liquefied natural gas (LNG), liquefied petroleum gas (LPG), methanol, ammonia, dimethyl ether (DME), coking coal, urea, and ammonium nitrate.
Officials said the initiative aligns with the national goal of achieving 100 million tonnes of coal gasification capacity by 2030.
India currently imports a substantial portion of these products, exposing the economy to international market volatility and geopolitical uncertainties. By converting domestic coal into valuable industrial feedstocks and fuels, policymakers aim to strengthen supply-chain resilience and improve long-term energy stability.
Domestic Coal to Power Chemicals and Clean Fuel Production
India possesses one of the world’s largest coal reserves, estimated at nearly 401 billion tonnes. Policymakers believe these reserves can serve as a critical strategic asset in supporting industrial growth and reducing external energy dependence.
Coal gasification technology converts coal into syngas through a controlled process involving oxygen and steam. The resulting gas mixture can then be used to manufacture chemicals, fertilizers, synthetic natural gas, transportation fuels, power, and direct reduced iron (DRI) used in steelmaking.
Industry experts say the technology offers an efficient pathway for utilizing low-grade coal resources while also supporting cleaner industrial operations compared to conventional coal combustion.
The government expects the initiative to create fresh opportunities in downstream industries such as petrochemicals, fertilizers, hydrogen production, and synthetic fuel manufacturing.
Government Targets 100 Million Tonnes Gasification Capacity by 2030
India’s energy demand is projected to rise sharply over the next decade due to rapid industrialization, urbanization, and infrastructure expansion. Coal currently accounts for more than 55 per cent of the country’s overall energy mix, making it the backbone of the national energy sector.
As the world’s second-largest producer and consumer of coal, India is seeking ways to maximize the economic value of its coal resources while balancing environmental and energy security concerns.
Officials believe coal gasification can help bridge the gap between traditional fossil fuel use and cleaner industrial technologies by enabling more efficient utilization of domestic coal reserves.
The proposed incentive scheme is expected to support large integrated projects capable of producing chemicals, clean fuels, and industrial gases at scale.
West Asia Tensions Accelerate India’s Energy Diversification Plans
Energy analysts noted that the government’s renewed emphasis on coal gasification has gained momentum amid recent geopolitical instability in West Asia, which has highlighted the vulnerability of global fuel supply chains.
Rising tensions in the region have intensified concerns over disruptions in LNG and crude oil supplies, prompting policymakers to accelerate efforts aimed at diversifying India’s energy sources.
Experts believe the proposed scheme reflects a broader strategy to reduce exposure to global market shocks while building a more resilient domestic energy ecosystem.
By leveraging its abundant coal reserves and investing in advanced conversion technologies, India aims to strengthen industrial competitiveness, improve energy independence, and support long-term economic growth.