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₹37,500 Crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects Approved

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On 13 May 2026, the Union Cabinet of India approved a ₹37,500 crore scheme to promote surface coal and lignite gasification projects. This initiative aims to gasify around 75 million tonnes of coal and lignite, targeting investment mobilization of ₹2.5-3 lakh crore and generating approximately 50,000 jobs. The scheme supports India’s national goal of achieving 100 million tonnes of coal gasification by 2030. It offers financial incentives capped at 20% of plant and machinery costs, with specific caps per project, product, and entity group. The program encourages indigenous technologies and extends coal linkage tenure up to 30 years to strengthen energy security and reduce import dependence on liquefied natural gas, urea, ammonia, and methanol.

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Key Facts

  • Date of Cabinet approval: 13 May 2026
  • Scheme Outlay: ₹37,500 crore
  • Target Gasification: 75 million tonnes of coal and lignite
  • Investment mobilization: ₹2.5-3 lakh crore
  • Job Creation: Approximately 50,000 jobs
  • National Gasification Target: 100 million tonnes by 2030
  • Financial Incentives: Up to 20% of plant and machinery cost
  • Incentive Caps: ₹5,000 crore per project, ₹9,000 crore per product (excluding synthetic natural gas and urea), ₹12,000 crore per entity group
  • Coal Reserves in India: About 401 billion tonnes coal, 47 billion tonnes lignite
  • Coal's share in energy mix: Over 55%
  • Coal linkage tenure extended to 30 years for gasification projects

Background & Context

Coal gasification is a thermochemical process converting coal or lignite into synthesis gas (syngas), a mixture primarily of carbon monoxide and hydrogen. Syngas serves as intermediate feedstock for producing chemicals, fertilizers, fuels like synthetic natural gas, and industrial gases. India imports over 50% of its liquefied natural gas and substantial shares of urea, ammonia, and methanol. Promoting domestic coal gasification reduces import dependence, strengthens energy security, and supports industrial growth. The scheme builds upon previous initiatives like the National Coal Gasification Mission and an earlier ₹8,500 crore incentive scheme approved in 2024.

Why This Matters for Exams

This scheme is a critical example of government policy targeting energy security, clean technology adoption, and import substitution. It highlights India's efforts to optimize domestic coal and lignite resources, encourage indigenous technologies, and create job opportunities. Important for current affairs and economic policy sections in competitive exams, the detailed financial outlay, targets, incentive structures, and sectoral impacts are significant facts to remember.

Points to Remember

  • Approved by Union Cabinet on 13 May 2026.
  • Financial outlay of ₹37,500 crore for coal and lignite gasification projects.
  • Goals include gasification of 75 million tonnes coal/lignite and national target of 100 million tonnes by 2030.
  • Offers financial incentives capped at 20% for plant and machinery costs with specified maxima per project, product, and corporate groups.
  • Coal linkage tenure extended to 30 years to ensure fuel security.
  • Scheme encourages use of indigenous coal gasification technologies.
  • Supports reduction of India's imports of LNG, urea, ammonia, and methanol.
  • India holds substantial coal and lignite reserves, with coal contributing over 55% of total energy mix.
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