New Delhi, September 8: The Centre has launched the second phase of its ambitious ₹37,500-crore scheme aimed at accelerating coal and lignite gasification projects, following a strong response to the first round of applications.The scheme is designed to encourage companies to convert domestic coal and lignite into higher-value products such as synthesis gas, methanol, ammonia, urea and hydrogen.
The government expects the initiative to help reduce dependence on imports of key energy and industrial products.Seven applications were received during the first phase from major companies, including Adani Enterprises, Gallant Ispat, NTPC, Shyam Cell & Power and Talcher Fertilizers.
The proposed projects cover areas such as urea production, direct reduced iron, syngas and synthetic natural gas.The applications will now undergo evaluation in accordance with the scheme’s guidelines and the prescribed request-for-proposal process.
The Union Cabinet had approved the scheme on May 13, 2026, with the broader objective of promoting large-scale coal gasification in the country. The government has set a target of achieving 100 million tonnes of coal gasification capacity by 2030, with 75 million tonnes expected to come through projects supported under the new scheme.Coal gasification converts coal into a gaseous mixture, primarily containing hydrogen and carbon monoxide.
This syngas can subsequently be processed into several industrial and energy products, potentially creating additional value from domestic coal resources.According to the government, India imported LNG, urea, ammonia and methanol worth about ₹2.77 lakh crore during 2024-25.
Expanding domestic production through coal gasification is therefore expected to contribute to import substitution and strengthen energy security.The initiative is also expected to attract significant private investment.
The government estimates that projects supported through the programme could generate investments of around ₹2.5 lakh crore to ₹3 lakh crore and create employment opportunities across the project and associated sectors.The latest initiative builds on an earlier ₹8,500-crore coal gasification programme approved in January 2024.
Eight projects under that initiative are currently at different stages of implementation.The second phase of the ₹37,500-crore programme opened on September 8, with applications to be invited at two-month intervals.
The government is expected to use the successive rounds to expand participation and accelerate the development of commercially viable coal and lignite gasification projects.
The programme is part of the Centre’s broader strategy to increase the utilisation of domestic coal resources while promoting value-added industrial production and reducing India’s reliance on imports.
