Union Cabinet approves coal, lignite gasification scheme with ₹37,500 crore outlay, will create 50,000 jobs

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹37,500-crore incentive scheme to promote coal gasification projects, aimed at boosting clean energy production and reducing dependence on forex-guzzling imports of LNG, urea, and methanol.

The scheme is projected to create nearly 50,000 jobs, both direct and indirect, across 25 projects in coal-bearing regions, read an official statement.

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Further, the central government has extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector in the Non-Regulated Sector (NRS) linkage auction framework. This will provide long-term policy certainty for investment in coal gasification projects.

The statement noted that the scheme marks a major step towards accelerating the country’s coal/lignite gasification programme, advancing the national target of gasifying 100 million tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG (over 50 per cent imported), urea (20 per cent imported), ammonia (100 per cent imported), and methanol (80–90 per cent imported).

The scheme is aimed at incentivising new surface coal/lignite gasification projects to produce syngas and its downstream products, targeting the gasification of approximately 75 million tonnes of coal/lignite.

Among other key features include financial incentives provided at a maximum of 20 per cent of the cost of plant and machinery; selection through a transparent and competitive bidding process, with an evaluation framework benchmarking project cost, coal input, and syngas output; and incentives disbursed in four equal instalments, linked to project milestones, IANS reported.

“Financial incentive for any single project capped at ₹5,000 crore; for any single product (except Synthetic Natural Gas and Urea) capped at ₹9,000 crore; and any single entity group capped at ₹12,000 crore across all projects,” read the official statement.

Coal/lignite utilisation is expected to generate ₹6,300 crore annually from 75 million tonnes of gasification envisaged under the scheme, plus downstream revenue from GST and other levies.

Notably, India has one of the world’s largest coal reserves (401 billion tonnes) and lignite reserves (47 billion tonnes), while coal accounts for more than 55 per cent of the country’s energy mix.