PIB Tracker₹37,500 crore coal-gasification scheme to be showcased
A scheme to promote surface coal and lignite gasification, with a target of 100 million tonnes of gasified coal by 2030.
What happened
- The Ministry of Coal announced a roadshow to publicise the Scheme for Promotion of Surface Coal/Lignite Gasification Projects, which carries a financial outlay of ₹37,500 crore.
- The roadshow is scheduled in New Delhi on 28 May 2026, with the Union Minister of Coal and Mines and the Minister of State for Coal and Mines attending.
- The scheme is positioned as a step towards the national target of gasifying 100 million tonnes (MT) of coal by 2030.
- It is expected to pull in investment of roughly ₹2.5–3 lakh crore and create around 50,000 direct and indirect jobs across nearly 25 projects.
- Utilisation of 75 MT of coal and lignite is projected to yield nearly ₹6,300 crore in annual revenue.
- The government frames the scheme as a route to energy security and to lower the import bill for LNG, urea, ammonia and methanol.
Background & context
A roadshow is an outreach and investor-engagement exercise — the news here is not the event itself but the scheme it markets. To place that scheme correctly, it helps to read it as the third and largest layer of a coal-gasification push that the Ministry of Coal has been building since 2021.
The lineage runs as follows. The National Coal Gasification Mission was launched in 2021, setting the headline ambition of gasifying 100 MT of coal by 2030 — the same 2030 figure the present scheme is designed to deliver against. To kick-start commercial projects, the Cabinet in January 2024 approved coal-gasification schemes worth ₹8,500 crore; under that round, eight projects with an incentive component of ₹6,233 crore are under implementation, spread across central public-sector undertakings, state PSUs and the private sector. The ₹37,500-crore scheme being showcased now sits on top of that earlier ₹8,500-crore round — a much larger envelope meant to scale the same idea from a handful of demonstration projects towards the 100-MT national target.
The underlying technology is the constant across all three layers. Coal gasification is a thermo-chemical process that reacts coal or lignite with controlled oxygen and steam to produce syngas (synthesis gas — chiefly carbon monoxide and hydrogen). That syngas is then converted into methanol, ammonia, synthetic natural gas (SNG), cleaner fuels and chemical feedstock. Crucially, the input is domestic coal and lignite, which is why the policy is pitched as import substitution: instead of importing LNG (for energy and SNG), urea and ammonia (made from imported natural gas), and methanol (largely imported), India would manufacture these from its own large coal reserves. India holds among the world's largest coal reserves but most of that coal is high-ash, low-grade thermal coal — gasification is one of the few routes to extract chemical value from it rather than only burning it for power.
The scheme also fits a wider institutional setting. India is among the world's largest coal producers (second after China), and the Ministry of Coal has been driving record output — on the same day this release was issued, South Eastern Coalfields Limited (SECL), a Coal India subsidiary, was being reviewed for its contribution to a 100-million-tonne production milestone, and coal-gasification projects were a standing agenda item in that review. So the gasification scheme is not a stand-alone announcement; it rides on a coal sector that is simultaneously chasing higher production and looking for higher-value uses of that coal beyond thermal power.
A word on the administering chain helps for the "who does what" type of recall. The Ministry of Coal is the policy and nodal authority; the bulk of India's commercial coal output flows through Coal India Limited (CIL) and its subsidiaries — including SECL, named in the same day's releases — while lignite, the lower-rank coal central to the "lignite" half of this scheme's title, is produced largely by NLC India Limited (formerly Neyveli Lignite Corporation). Lignite, sometimes called brown coal, is younger and has higher moisture and lower carbon than the bituminous coal mined elsewhere; it is concentrated in States such as Tamil Nadu, Rajasthan and Gujarat. By naming both "coal" and "lignite", the scheme deliberately opens the door to gasifying these lower-grade lignite resources as well, which broadens the feedstock base beyond what a coal-only scheme would cover.
It is also worth distinguishing the products the syngas feeds, because the examinable confusion usually lies there. Methanol is a base chemical and a potential clean transport fuel, central to India's "Methanol Economy" idea promoted by NITI Aayog. Ammonia is the building block of urea and other nitrogenous fertilizers, today made overwhelmingly from imported natural gas — so coal-to-ammonia directly substitutes that import. Synthetic natural gas (SNG) is methane-rich gas that can be injected into the gas grid or used as city gas, substituting imported LNG. Together these explain why the release names LNG, urea, ammonia and methanol specifically as the imports the scheme is meant to displace: each maps to one of the gasification products.
For Prelims
- Name: Scheme for Promotion of Surface Coal/Lignite Gasification Projects.
- Nodal ministry: Ministry of Coal (a central-sector intervention administered by the Union government).
- Outlay: ₹37,500 crore.
- National target it serves: gasify 100 MT of coal by 2030.
- Process: coal/lignite → syngas → methanol, ammonia, synthetic natural gas (SNG), cleaner fuels, chemical feedstock.
- Stated purpose: energy security and import substitution for LNG, urea, ammonia and methanol.
- Scale claims: ₹2.5–3 lakh crore investment mobilisation · ~50,000 direct and indirect jobs · ~25 projects · 75 MT utilisation → ~₹6,300 crore annual revenue.
- The family it belongs to: (1) National Coal Gasification Mission, 2021 — set the 100-MT-by-2030 target; (2) ₹8,500-crore coal-gasification schemes, January 2024 — eight projects, ₹6,233 crore incentive, under implementation; (3) this ₹37,500-crore scheme, the largest layer.
- "Surface" vs underground: this scheme covers surface gasification (coal mined and gasified in plants above ground). It is distinct from Underground Coal Gasification (UCG), where coal is gasified in situ in the seam — do not conflate the two.
- What it is NOT: it is not coal liquefaction (coal-to-liquid) as such, though syngas can feed liquid fuels; it is not a power-generation scheme — its purpose is chemicals and gas, not thermal electricity; and it is not the same as the 2024 ₹8,500-crore round, which is a separate, earlier and smaller scheme it builds upon.
Why it matters
The problem the scheme addresses is twofold. First, India runs a large and persistent import bill for energy and nitrogenous fertilizer inputs — LNG for gas supply and synthetic natural gas, and natural-gas-derived urea and ammonia for agriculture. Domestic gasification of abundant low-grade coal offers a path to make these at home, reducing both the import dependence and the exposure to volatile international gas prices. Second, much of India's coal is high-ash thermal coal of limited value beyond burning; gasification is a way to convert that resource into higher-value chemicals (methanol, ammonia) and gas, which is a more economically efficient use of a strategic domestic resource.
There is a real tension worth weighing for a balanced answer. Gasification is carbon-intensive at the front end — converting coal to gas and chemicals can emit significant carbon dioxide unless paired with carbon capture, so it sits uneasily alongside India's net-zero-by-2070 commitment. The government's case rests on energy security and import substitution rather than on decarbonisation; the climate trade-off is the standard critique. The fiscal scale is also large — an outlay of ₹37,500 crore plus the expectation of ₹2.5–3 lakh crore in mobilised investment — so execution risk, project viability and the price competitiveness of coal-derived methanol and SNG against imports are the live questions.
There is a further strategic angle that lifts this above a routine fertilizer or fuel story. Fertilizer security and energy security are both areas where India is heavily import-exposed: a large share of urea and the gas to make it is imported, and any disruption in global gas markets feeds straight into both the farm economy (through fertilizer subsidy and availability) and the power and city-gas sectors. By converting a domestic resource India holds in abundance into precisely these import-substituting products, the scheme is an attempt to convert a low-value resource advantage into resilience against external shocks. That framing — domestic resource → strategic self-reliance — is the strongest line for a Mains argument, and it is why the policy is being pushed despite the carbon cost.
For balance, the standard counter-arguments should also be carried: the capital intensity and long gestation of gasification plants; the historically poor commercial track record of coal-to-chemicals projects worldwide when oil and gas prices are low; the water requirement of gasification, which is significant and competes with other uses in water-stressed mining regions; and the question of whether scarce public capital is best deployed on a carbon-intensive route rather than on renewables, green hydrogen and green ammonia, which would meet the same fertilizer and fuel needs without the emissions. A complete answer presents the scheme as a calculated energy-security bet with real climate and viability trade-offs, not as a settled win.