India Approves ₹375 Billion Scheme to Incentivise Coal Gasification Projects

The Union Cabinet on Tuesday approved a coal gasification scheme with an outlay of ₹375 billion to incentivise new coal and lignite gasification projects for production of syngas and downstream products.

The scheme will target gasification of about 75 million tonnes of coal and lignite, with the government expecting it to attract investments worth about ₹3 trillion. A separate scheme to incentivise up to 25 million tonnes of coal gasification is already under implementation.

The approval comes at a time when India is facing tighter gas supplies and higher import risks following the conflict involving the US-Israel coalition and Iran in West Asia. The tensions have disrupted shipping movement through the Strait of Hormuz, a key route for India’s energy imports.

Under the scheme, the government will provide financial incentives of up to 20% of the cost of plant and machinery in four equal installments linked to project milestones.

The incentive for a single project has been capped at ₹50 billion.

Also Read: Coal Gasification Should be a Strategic Priority, Not Just Another Mission