The Centre’s ₹37,500-crore coal gasification incentive scheme has attracted seven proposals from major companies, targeting domestic coal use to reduce India’s ₹2.77-lakh-crore LNG and feedstock import bill. The scheme aims to develop 75 MT coal and lignite gasification capacity by 2030, fostering significant investments.
The Centre’s ₹37,500-crore coal gasification incentive scheme has drawn seven proposals from five companies in its first round, with Adani Enterprises alone submitting three urea projects and NTPC proposing a synthetic natural gas facility, as the government looks to use domestic coal to cut a ₹2.77-lakh-crore import bill for LNG and key industrial feedstocks.
Besides Adani Enterprises and NTPC, the applicants include Talcher Fertilisers, Gallantt Ispat and Shyam Sel & Power. Gallantt has proposed production of direct reduced iron (DRI) and syngas, Shyam Sel & Power has applied for a syngas project, while Talcher Fertilisers has proposed a urea facility. Adani’s three applications are all for urea production.
The first-round response is significant for the Centre’s plan to develop 75 million tonnes (MT) of coal and lignite gasification capacity under the scheme, accounting for three-fourths of India’s broader target of 100 MT by 2030. The government estimates the programme could catalyse investments of ₹2.5-3 lakh crore.
“Seven applications in the very first round, including from some of India’s largest industrial houses and public sector undertakings, are a clear vote of confidence in the scheme and in India’s coal gasification mission,” a senior coal ministry official said.
The scheme seeks to convert domestic coal and lignite into higher-value products including syngas, methanol, ammonia, urea and hydrogen, thereby substituting imports of fuels and industrial raw materials. India’s imports of LNG, urea, ammonia and methanol together were worth around ₹2.77 lakh crore in FY25, according to the ministry.
Atanu Mukherjee, CEO, Dastur Energy, said the entry of companies such as Adani and NTPC indicates that coal gasification is beginning to be evaluated as “a serious industrial investment proposition rather than only a policy-led initiative.”
“The strategic case is compelling: India has abundant domestic coal, while continuing to import significant quantities of gas, fertiliser feedstocks and other industrial molecules. Gasification creates an opportunity to convert a domestic resource into higher-value products and reduce part of that external dependence,” Mukherjee said.
The scheme provides financial incentives of up to 20% of the eligible cost of plant and machinery, subject to prescribed ceilings. It builds on the earlier ₹8,500-crore financial incentive programme approved in January 2024, under which eight gasification projects are currently under implementation.
Mukherjee, however, said project economics would determine the next phase. Gasification projects are capital intensive and their bankability would depend on technology suited to Indian coal, scale, long-term product offtake, competitive financing and effective carbon management.
“The government’s incentive framework can help absorb some of the early-stage risk, but ultimately these projects will have to demonstrate sustainable returns without being permanently dependent on subsidy,” he said.
The first application window, following the July 7 issuance of the request for proposal, closed on September 7. The ministry opened Round 2 on September 8, with subsequent application windows scheduled every two months. The seven proposals will now undergo detailed evaluation under the scheme guidelines and RFP.