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Cabinet approves ₹37,500 crore coal gasification scheme
India's Union Cabinet approved a ₹37,500 crore coal gasification scheme to convert coal and lignite into synthesis gas for fuels, fertilisers, and chemicals, aiming to reduce import dependence. The package includes incentives, a milestone-driven investment plan, and extended coal linkage tenure, building on earlier mission targets and prior JV approvals.
Why It Matters
The scheme seeks to boost energy security and domestic production by using coal resources to substitute high-value imports, create jobs, and generate government revenue, amid geopolitical supply concerns.
Timeline
6 Events
Article reporting the cabinet decision published
May 14, 2026
The article summarising the cabinet approval was published on May 14, 2026.
Cabinet approves ₹37,500 crore coal gasification scheme
May 13, 2026
The Union Cabinet approved a ₹37,500 crore coal gasification scheme to gasify about 75 MT of coal and lignite, part of a target to reach 100 MT by 2030. Incentives of up to 20% of plant and machinery costs will be disbursed in four equal installments tied to milestones. Per-project cap is ₹5,000 crore; per product cap ₹9,000 crore (except SNG and urea), and per entity group ₹12,000 crore. The scheme is technology-agnostic with a preference for indigenous technologies. The policy also extends coal linkage tenure to 30 years under the Production of Syngas leading to Coal Gasification sub-sector. The government expects mobilised investment around ₹3 lakh crore, about 50,000 direct and indirect jobs across 25 projects, and ₹6,300 crore annual exchequer revenue from utilisation and downstream taxes.
HT reports unspent funds confirming January 2026 status
April 14, 2026
HT reported, citing government records, that ₹300 crore allocated for coal gasification in FY26 remained unspent as of January 2026.
Unspent coal gasification budget for FY26 flagged
January 2026
The entire ₹300 crore allocated for coal gasification in FY26 remained unspent as of January 2026.
Approval of flagship JV projects (CIL-GAIL and CIL-BHEL)
January 2024
Two flagship joint venture projects were approved: CIL-GAIL coal-to-SNG plant in West Bengal and CIL-BHEL coal-to-ammonium nitrate plant in Odisha, together worth over ₹24,000 crore.
Launch of coal gasification mission and target setting
2020
The government launched its coal gasification mission and set a target to gasify 100 MT by 2030.