Centre set to clear ₹35,000 crore coal gasification incentive package
Synopsis
The Centre is set to approve a ₹35,000 crore coal gasification package — more than four times the existing ₹8,500 crore scheme — as Middle East supply chain disruptions accelerate India's push to cut LNG and fertiliser import dependence and hit a 100 million tonne gasification target by 2030.
Key Takeaways
The Centre is expected to approve a ₹35,000 crore coal gasification incentive package this month, per reliable sources.
The proposal by the Ministry of Coal scales up the existing ₹8,500 crore scheme approved in January 2024 .
The scheme targets 100 million tonnes of coal gasification capacity by 2030 , reducing dependence on imported LNG, urea, ammonium nitrate, and ammonia .
Jindal Steel and Power Limited (Angul, Odisha) received ₹569.05 crore ; New Era Cleantech Solution (Chandrapur, Maharashtra) received ₹1,000 crore ; Greta Energy Limited received ₹414.01 crore under the existing scheme.
Supply chain disruptions from the Middle East conflict have added urgency to India's domestic energy push.
The Centre is expected to approve a fresh package of financial incentives this month to accelerate coal gasification projects across India, with an estimated outlay of over ₹35,000 crore, according to reliable sources. The Cabinet proposal, drawn up by the Ministry of Coal, will significantly scale up the earlier ₹8,500 crore incentive programme approved in January 2024, which first established a structured framework for coal gasification in India.
What the New Scheme Proposes
The proposed scheme, to be taken up by the Union Cabinet, is aimed at accelerating surface coal and lignite gasification projects across the country. A central goal is promoting self-reliance by reducing India's import dependence on LNG, urea, ammonium nitrate, and ammonia. The initiative also seeks to meet the ambitious national target of 100 million tonnes of coal gasification capacity by 2030.
This comes amid supply chain disruptions in LNG, fertiliser, and fertiliser feedstock triggered by the ongoing Middle East conflict — a development that has added urgency to India's push for domestic energy alternatives.
Background: The ₹8,500 Crore Foundation Scheme
In February 2025, the Ministry of Coal announced it had issued Letters of Award (LOAs) to applicants selected under Category II of the existing ₹8,500 crore Coal Gasification Incentive Scheme. The scheme was designed to reduce carbon emissions and strengthen energy security. Under Category II, awardees — comprising both private companies and public sector undertakings (PSUs) — are eligible for an allocation of ₹1,000 crore per project or 15% of capital expenditure (capex), whichever is lower.
Projects Already Awarded Incentives
Jindal Steel and Power Limited's 2 MMTPA coal gasification project at Angul, Odisha has been awarded ₹569.05 crore in financial incentives. The ₹3,793 crore project will convert coal into Direct Reduced Iron (DRI) through the gasification process.
New Era Cleantech Solution Private Limited has received a financial incentive of ₹1,000 crore for its project in Bhadravati, Chandrapur, Maharashtra. With a total project cost of ₹6,976 crore, it aims to produce 0.33 MMTPA of ammonium nitrate and 0.1 MMTPA of hydrogen.
Greta Energy Limited has been awarded ₹414.01 crore for its coal gasification project at MIDC Bhadravati, Chandrapur, Maharashtra.
Why It Matters
Coal gasification is seen as a critical bridge technology for India, enabling the country to leverage its vast domestic coal reserves while reducing dependence on imported hydrocarbons. Notably, India remains one of the world's largest importers of LNG and fertiliser feedstock — vulnerabilities that geopolitical disruptions have repeatedly exposed. The new ₹35,000 crore outlay, if approved, would represent a more than fourfold increase over the existing scheme, signalling a significant escalation in policy ambition.
With Cabinet approval expected this month, the coal gasification sector could see a substantial influx of public capital, potentially unlocking further private investment in a space that has historically struggled to attract it at scale.
Point of View
500 crore to ₹35,000 crore is a statement of intent — but intent has preceded underdelivery in India's energy transition before. The real question is whether this outlay is structured to attract private capital at scale or remains a PSU-dominated exercise. Coal gasification sits at an uncomfortable intersection: it extends the life of coal while reducing import bills, which makes it pragmatic but not transformational. With the 2030 deadline for 100 million tonnes now just five years away and current capacity a fraction of that, the execution clock is already running.
NationPress
31 Jul 2026
Frequently Asked Questions
What is the new coal gasification incentive package proposed by the Centre?
The Centre is expected to approve a fresh financial incentive package of over ₹35,000 crore this month to accelerate coal and lignite gasification projects across India. It significantly scales up the earlier ₹8,500 crore Coal Gasification Incentive Scheme approved in January 2024.
Why is India pushing coal gasification now?
India is accelerating coal gasification to reduce its dependence on imported LNG, urea, ammonium nitrate, and ammonia. The urgency has increased due to supply chain disruptions caused by the ongoing Middle East conflict, which has affected global fertiliser and energy feedstock supplies.
What is India's coal gasification target by 2030?
India has set an ambitious target of 100 million tonnes of coal gasification capacity by 2030. The new ₹35,000 crore scheme is designed to help meet this national goal by accelerating both surface coal and lignite gasification projects.
Which companies have already received incentives under the existing scheme?
Under Category II of the ₹8,500 crore scheme, Jindal Steel and Power Limited received ₹569.05 crore for its Angul, Odisha project; New Era Cleantech Solution Private Limited received ₹1,000 crore for its Chandrapur, Maharashtra project; and Greta Energy Limited received ₹414.01 crore for its MIDC Bhadravati project.
How does the new scheme differ from the earlier ₹8,500 crore programme?
The new proposal represents a more than fourfold increase over the existing ₹8,500 crore scheme. While the earlier programme laid the foundational framework and issued Letters of Award to selected projects, the new package is intended to significantly expand the scale and pace of coal gasification across the country.
