Cabinet Approves ₹37,500 Crore Coal Gasification Scheme To Boost Domestic Energy Security

The Centre on Wednesday cleared a ₹37,500 crore incentive scheme aimed at accelerating coal gasification projects across the country, with the government targeting lower import dependence and higher utilisation of domestic coal reserves.

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The approval was granted by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi.

Addressing reporters after the Cabinet meeting, Union Minister Ashwini Vaishnaw said the programme is expected to attract investments worth nearly ₹3 lakh crore and support projects capable of gasifying 75 million tonnes of coal.

The government has positioned the scheme as part of its broader energy security strategy at a time when geopolitical tensions and supply disruptions continue to impact global fuel and commodity markets.

Focus On Reducing Imports

Coal gasification converts coal into synthetic gas, also known as syngas, which can be used in the production of fertilisers, methanol, hydrogen, and several industrial chemicals.

According to the government, the initiative is intended to reduce India’s dependence on imported liquefied natural gas (LNG), methanol, ammonia, urea, ammonium nitrate, and coking coal.

Official data shows India imports more than 90% of its methanol requirement and around 83% of its crude oil demand. The country also remains dependent on imports for several feedstocks used in fertiliser and industrial manufacturing.

Vaishnaw said the coal gasification programme aligns with the government’s “Atma Nirbhar Bharat” strategy and is expected to improve long-term energy resilience by increasing the use of locally available coal resources.

Target Of 100 Million Tonnes By 2030

The government has set a target of developing 100 million tonnes of coal gasification capacity by 2030.

Coal continues to remain a major part of India’s energy mix despite the ongoing expansion of renewable energy capacity. The fuel accounts for more than half of the country’s overall energy consumption and continues to dominate power generation.

The latest incentive package is expected to encourage both public and private sector participation in gasification projects, particularly in chemicals, fertilisers and clean fuel production.

The government has also highlighted coal gasification as a cleaner alternative to direct coal combustion because the process can support more efficient use of coal and lower emissions in certain industrial applications.

Energy Transition And Industrial Demand

India’s industrial demand for methanol, ammonia, and hydrogen has been rising steadily due to growth in manufacturing, refining, and fertiliser production.

The Cabinet approval comes at a time when elevated global energy prices and shipping disruptions have increased concerns around import costs and supply-chain risks.

The Centre has been expanding domestic coal production over the past few years while also pushing new technologies aimed at cleaner utilisation of fossil fuels.

Coal India and several state-run companies have already announced plans for coal gasification and synthetic fuel projects in recent years.

The newly approved scheme is expected to support additional capacity creation and encourage long-term investments in downstream chemical and energy infrastructure linked to coal gasification.