Scheme for Promotion of Surface Coal/Lignite Gasification Projects

The Union Cabinet has approved a ₹37,500 crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects to accelerate India’s target of gasifying 100 million tonnes of coal by 2030.

The scheme aims to strengthen energy security, reduce dependence on imports of products such as LNG, urea, ammonia and methanol, and promote the diversified use of India’s vast coal and lignite reserves under the goals of Atmanirbhar Bharat and Make in India.

Coal gasification converts coal and lignite into synthesis gas (syngas), which can be used for producing fuels, fertilisers and chemicals domestically, thereby reducing exposure to global price volatility and geopolitical supply disruptions.

The government has also extended coal linkage tenure up to 30 years under the “Production of Syngas leading to Coal Gasification” category in the Non-Regulated Sector linkage auction framework to provide long-term policy certainty for investors.

The scheme builds upon the National Coal Gasification Mission launched in 2021 and the earlier ₹8,500 crore support package approved in 2024, under which multiple gasification projects are already under implementation.

Coal and Lignite Reserve in India

India holds one of the world’s largest coal reserves (~401 billion tonnes) and lignite reserves (~47 billion tonnes). Coal accounts for over 55% of the country’s energy mix.

Gasification converts coal/lignite into ‘synthesis gas’ (syngas), a versatile feedstock for producing fuels and chemicals domestically, enabling India to substitute high-value imports and insulate itself from global supply disruptions and price volatility.

India’s import bill for key substitutable products LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others stood at approximately Rs.2.77 lakh crore in FY2025, a vulnerability further exposed by the ongoing geopolitical situation in West Asia.