The Indian government has announced that coal gasification has saved Rs 28,000 crore in foreign exchange by reducing reliance on imported oil, methanol, and ammonia. This comes as preparations begin for the second phase of the programme.
Phase 1 Achievements
According to the coal ministry, the first phase of the scheme, launched in 2023-24, mobilised Rs 85,000 crore in investments and enabled the utilisation of 23 million tonnes of coal annually. The draft request for proposal for the second phase is expected to be released soon, with the final bidding document anticipated in July.
Cabinet Approval for Phase 2
Earlier this month, the Union Cabinet approved the second phase of the incentive scheme for gasification of 75 million tonnes (MT) of coal and lignite, with a financial outlay of Rs 37,500 crore. The government expects the scheme to attract investments of Rs 2.5-3 lakh crore across 25 projects in coal-rich regions over the next five years and create 50,000 direct and indirect jobs. The programme aims to accelerate coal gasification and help achieve the national target of converting 100 MT of coal into syngas by 2030.
State-Level Initiatives
Officials noted that Odisha and Maharashtra have already announced separate incentive schemes to promote coal gasification projects, with several other states expected to follow. Gasification will help produce methanol, fertilisers, hydrogen, and chemicals, strengthening energy security and reducing dependence on imports of key products such as LNG, urea, ammonia, and methanol.
Import Bill and Reserves
India's import bill for key substitutable products such as liquefied natural gas, urea, ammonium nitrate, ammonia, coking coal, methanol, and dimethyl ether (DME) stood at nearly Rs 2.8 lakh crore in FY25. India holds one of the world's largest coal reserves of 401 billion tonnes and lignite reserves of 47 billion tonnes. Gasification converts coal into synthesis gas (syngas), which can substitute high-value imports and help shield the economy from global supply disruptions and price volatility. Coal remains the backbone of India's energy sector, accounting for more than 55% of the country's energy mix.
National Coal Gasification Mission
The government launched the National Coal Gasification Mission in 2021, followed by an Rs 8,500 crore incentive framework in 2024 to support public and private sector projects, under which eight projects are currently under implementation.
