Providing a fillip to the country’s pursuit of coal gasification, the Union Cabinet Wednesday approved a ₹37,500 crore package to boost the sustainable alternate mining method.

The package seeking to promote surface coal gasification entails conversion of coal into syngas (that is, synthetic gas) which be further used to produce downstream products like urea – about one-fifth of whose requirement is met through imports, methanol – approximately 80-90% of it is met through imports, ammonia on which there is complete import dependency, synthetic natural gas (SNG) and fertilisers, among other products.

“India’s import bill for key substitutable products LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, DME and others stood at approximately ₹2.77 lakh crore in FY2025, a vulnerability further exposed by the ongoing geopolitical situation in West Asia,” the press announcement held.

With the scheme, India is targeting to gasification of approximately 75 million tonnes of coal and lignite. This would contribute to the 100 MT target set for 2030.

Further seeking to provide long-term certainty for investment in the realm, the government also extended the coal linkage tenure up to thirty years within an accompanying component of the scheme entailing production of syngas leading to coal gasification.

More importantly though, the scheme would accord a financial incentive of up to one-fifth of the cost of plant and machinery.

In terms of project size, the scheme caps a financial incentive of ₹5,000 crore for a single project, and for any single product-centred project, except that for SNG and urea, it extends up to ₹9,000 crore.

A single entity would be able to avail a maximum of ₹12,000 crore across all project categorisations.

The scheme further builds on the National Coal Gasification Mission, and the ₹8,500 crore incentive scheme which was approved in January 2024.

Eight projects under the latter scheme worth ₹6,233 crore are under implementation.

Notably, the Coal Ministry had told The Hindu earlier that “in the coming months, more projects are expected to come up”.