Union Coal and Mines Minister G Kishan Reddy in Chennai, Tamil Nadu, on Sunday, June 21, 2026. | Photo Credit: Bijoy Ghosh

The Centre will finalise guidelines for its coal gasification incentive scheme within two months, paving the way for fresh investments in projects aimed at reducing India’s dependence on imported fuels and chemicals, Union Coal and Mines Minister G Kishan Reddy told businessline on Sunday.

Reddy said the Scheme for Promotion of Surface Coal Gasification Projects involves a financial outlay of ₹46,000 crore. The scheme marks a major step towards accelerating India’s coal gasification programme, advancing the national target of gasifying 100 million tonnes (MT) of coal by 2030, strengthening energy security, and reducing dependence on imports of key products such as LNG (more than 50 per cent imported), urea (20 per cent imported), ammonia (100 per cent imported), and methanol (80–90 per cent imported), he said.

The draft framework has already undergone extensive stakeholder consultations, including roadshows and discussions with industry players held in Mumbai on Friday. Once the guidelines are notified, companies will be invited to submit applications for incentives under the scheme, he said at the BJP Tamil Nadu headquarters. He was in Chennai to highlight the party’s achievements under Prime Minister Narendra Modi.

“Within two months, the guidelines will be finalised and we can start the activity,” Reddy said, adding that companies would also be eligible for long-term coal linkages of up to 30 years. Foreign companies can participate through Indian-registered entities, either independently or through joint ventures, he added.

The government has earmarked ₹46,000 crore as incentives for coal gasification projects and Reddy expects more than 35 companies to enter the sector in the coming months. Five of the eight companies selected under the first phase of the incentive programme have already started work, he said.

Reddy said coal gasification would enable the production of syngas and downstream products such as methanol, ethanol, petrol, diesel, urea and ammonia, helping reduce India’s import bill for key industrial feedstocks.

On Saturday, Prime Minister Narendra Modi laid the foundation stone for a ₹25,000-crore coal gasification project in Odisha, one of the largest such investments in the country. The project is expected to accelerate the government’s push to convert coal into value-added products such as methanol, ammonia and synthetic fuels, he said.

Focus on critical minerals

Earlier speaking to newspersons, the Minister highlighted India’s growing focus on critical minerals through the ₹34,000-crore National Critical Mineral Mission. The country has already acquired a lithium asset in Argentina and is pursuing mineral opportunities in countries including Australia and Chile.

On NLC India Ltd’s diversification plans, Reddy said the company has partnered with the Bhabha Atomic Research Centre to extract rare earth elements from fly ash generated by lignite-based power plants. A pilot project is underway and could lead to commercial production in Tamil Nadu within a year.

Published on June 21, 2026