The Union Cabinet on Wednesday approved a ₹37,500-crore incentive scheme to promote coal gasification projects, aimed at boosting clean energy production and reducing dependence on forex-guzzling imports.

"An outlay of Rs 37,500 crore has been kept for this scheme, and there will be an investment of around Rs 3,000 lakh crore in this, and the projects will be put up for gasifying 75 million tonnes of coal," Union Information & Broadcasting Minister Ashwini Vaishnaw said in a media briefing.

The decision was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi.

Vaishnaw said the country has 401 million tonnes of known coal reserves, which is enough for the next 200 years.

"We all know about the current geopolitical situation. So we have to take all the decisions to become Atma Nirbhar. In this context, a big decision on coal gasification was taken today," he said.

Coal gasification refers to the process of converting dry fuel into synthetic gas (syngas), which is used as an alternative fuel and helps reduce carbon emissions. This process supports production of methanol, fertilizers, hydrogen and chemicals, cutting reliance on imported oil (83 per cent), methanol (over 90 per cent) and ammonia (13-15 per cent).

The scheme is aimed at accelerating surface coal and lignite gasification projects across the country, promoting self-reliance by reducing import dependence on critical commodities such as LNG, urea, ammonium nitrate, ammonia, and coking coal, while enabling enhanced utilisation of domestic resources.

The country aims for 100 million tonnes of coal gasification capacity by 2030.

Coal remains the backbone of India's energy sector, accounting for over 55 per cent of the country's energy mix. As the second-largest producer and consumer of coal globally, India's coal consumption is expected to grow significantly as its energy demands continue to rise.

According to experts, gasification presents a unique opportunity for India to unlock the full value of its vast domestic reserves through clean and efficient utilisation pathways.

Published on May 13, 2026