New Delhi: India is stepping up efforts to promote coal gasification and clean coal technologies, with the National Coal Gasification Mission setting a target of achieving 100 million tonnes (MT) of coal gasification capacity by 2030.
The government has introduced financial incentives, coal linkage support and policy measures to accelerate coal gasification projects across the country. As of now, approximately 22.6 million tonnes per annum (MTPA) of coal gasification capacity is operational or under implementation.
The information was provided by Union Minister of State for Coal and Mines Satish Chandra Dubey in a written reply in the Rajya Sabha.
India Targets 100 MT Coal Gasification Capacity by 2030
The National Coal Gasification Mission has set an ambitious target of achieving 100 MT of coal gasification capacity by 2030.
At present, around 22.6 MTPA of coal gasification capacity is either operational or under implementation. The capacity includes projects being developed by private companies, fertiliser producers and projects approved under the government’s financial incentive scheme.
The existing and upcoming capacity comprises:
- Jindal Steel Limited (JSL): Approximately 8 MTPA, operational
- Talcher Fertilisers Limited (TFL): Approximately 2.6 MTPA, under implementation
- Eight projects approved under the ₹8,500 crore Financial Incentive Scheme: Approximately 12 MTPA, under implementation
These projects are expected to contribute significantly towards India’s long-term coal gasification goals.
Government Approves ₹37,500 Crore Scheme for Coal Gasification
To further accelerate the development of coal gasification projects, the Government approved a new scheme for the Promotion of Surface Coal/Lignite Gasification Projects on 13 May 2026.
The scheme has a financial outlay of ₹37,500 crore and is expected to utilise approximately 75 MTPA of coal.
The government expects the new initiative to make a substantial contribution towards achieving the national target of 100 MT of coal gasification capacity by 2030.
The scheme is aimed at encouraging large-scale investment in coal and lignite gasification and supporting the development of cleaner and value-added uses of domestic coal resources.
Eight Coal Gasification Projects Approved Under ₹8,500 Crore Scheme
Under the ₹8,500 crore Scheme for Promotion of Coal/Lignite Gasification, approved on 24 January 2024, the government has approved eight coal gasification projects.
Of these projects, one project of Jindal Steel Limited (JSL) has achieved financial closure and is currently under construction.
Overall, five projects have completed groundbreaking ceremonies and are at different stages of obtaining regulatory clearances and implementation.
The government expects these projects to help expand India’s domestic coal gasification ecosystem while supporting the production of value-added products from coal.
Financial Incentives for Coal Gasification Projects
The Government of India has introduced financial support mechanisms to encourage companies to invest in coal gasification projects. Under the existing ₹8,500 crore scheme, eligible projects can receive a financial incentive of 15% of capital expenditure (capex).
Under the newly approved ₹37,500 crore scheme, financial support of up to 20% of the eligible cost of Plant and Machinery is available.
Government Provides Coal Linkage Support
The government has also introduced measures to improve the availability of coal for gasification projects.
Coal linkage through coal linkage auctions has been facilitated by creating a new sub-sector called “production of Syngas leading to coal gasification”. The floor price for this sub-sector has been kept at a level equivalent to that applicable to the power sector.
The tenure of coal linkages has also been extended to 30 years, providing greater long-term certainty for coal gasification projects.
In addition, projects with an auctioned coal mine are eligible to receive coal linkage beyond the capacity of their allocated mine.
These measures are expected to improve the availability and long-term supply of coal required for gasification projects.
Policy Support for Coal Gasification and Underground Coal Gasification
The government has introduced several policy measures to promote the use of coal for gasification.
A 50% rebate in revenue share is available for coal used for gasification, helping to make the process more economically viable.
The government has also issued a framework and guidelines for Underground Coal Gasification (UCG). Exemption has been granted for taking up pilot projects related to UCG.
In the case of coal block auctions for underground coal gasification, the floor price has been reduced to 2% from 4%, which is applicable to underground coal mining.
The government has also approved a waiver of upfront payment, along with a 50% rebate on the Performance Bank Guarantee, to provide further policy support for coal gasification initiatives.
BRICS Side Event Focuses on Clean Coal Technologies
During India’s BRICS Chairmanship, the Ministry of Coal organised a BRICS Side Event on Clean Coal Technologies on 24 June 2026.
The event placed special focus on coal gasification and provided a platform for BRICS countries to exchange knowledge, experiences and best practices related to clean coal technologies.
The initiative reflects India’s efforts to promote technological cooperation and encourage the adoption of cleaner methods for utilising coal resources.
Coal Gasification to Support Energy Security and Import Substitution
Coal gasification allows domestic coal to be used in a cleaner and more value-added manner for the production of several important products.
These include:
- Synthetic natural gas
- Chemicals
- Fertilisers
- Hydrogen
- Other downstream products
The technology is expected to help reduce India’s dependence on imports by enabling greater domestic production of these products using locally available coal resources.
The government’s coal gasification initiatives are also expected to strengthen energy security, promote import substitution, encourage value-added industrial production, attract investments and generate employment.
Coal Gasification Projects Could Enable ₹1.5 Lakh Crore Annual Import Substitution
The government expects coal and lignite gasification projects to make a significant contribution to import substitution.
Once projects under the ₹8,500 crore scheme, the ₹37,500 crore scheme, and Talcher Fertilisers Limited are commissioned, the expected import substitution from coal and lignite gasification could be around ₹1.5 lakh crore annually.
This could help reduce India’s reliance on imported products while creating opportunities for domestic industries based on coal-derived chemicals, fertilisers, hydrogen and other value-added products.
Coal Gasification to Drive Cleaner and Value-Added Coal Utilisation
The government’s push for coal gasification is aimed at transforming the way domestic coal resources are utilised. Instead of relying solely on conventional coal consumption, gasification can enable the production of a wider range of industrial products and energy resources. With financial incentives, long-term coal linkage support and policy measures for both surface and underground coal gasification, the government is seeking to create a stronger ecosystem for clean coal technologies.
