The Union Cabinet has approved a Rs 37,500 crore scheme to promote coal and lignite gasification projects, Union minister Ashwini Vaishnaw on Wednesday said, positioning the initiative as a major step towards cleaner coal utilisation, energy security and import substitution.The scheme aims to accelerate the conversion of coal and lignite into synthesis gas, or syngas, which can be used for power generation, fertilisers, chemicals and other downstream industrial products.Presenting details of the programme, the minister said India holds one of the world’s largest reserves of coal and lignite and the government wants to diversify their usage beyond conventional thermal power generation.According to the presentation made by the minister, India has coal reserves of around 401 billion tonnes and lignite reserves of nearly 47 billion tonnes, while coal currently contributes more than 55 per cent of the country’s energy mix.The Cabinet-approved “Scheme for Promotion of New Surface Coal/Lignite Gasification Projects for Production of Syngas and Downstream Products” targets the gasification of nearly 75 million tonnes of coal and lignite.The government expects the programme to attract investments worth around Rs 3 lakh crore across the value chain.Coal gasification is a process in which coal reacts with oxygen and water under high temperature and pressure conditions to produce syngas, primarily comprising carbon monoxide and hydrogen. The gas can subsequently be processed for industrial and energy applications.The projects under the scheme would be selected through a transparent bidding mechanism.The government will provide financial incentives of up to 20 per cent of the cost of plant and machinery, with support disbursed in four equal instalments linked to project milestones.The scheme also includes incentive caps of Rs 5,000 crore per project, Rs 9,000 crore per product category — excluding synthetic natural gas and urea — and Rs 12,000 crore per entity or group across all projects.In a major policy support measure, coal and lignite linkage tenures for syngas-based gasification projects will be extended up to 30 years to improve long-term fuel security and project viability.The government is also encouraging the adoption of indigenous technologies as part of efforts to strengthen domestic capability in coal conversion and clean coal technologies.The initiative aligns with India’s broader strategy of reducing dependence on imported fuels, chemicals and fertiliser feedstocks while creating new industrial opportunities around coal-based value addition.
