The story so far:

In a roadshow promoting surface coal gasification, Union Coal and Mines Minister G. Kishan Reddy said the technology, which can also yield a range of downstream products, has the potential to substitute imports worth up to ₹3 lakh crore. To encourage coal gasification, the Union Cabinet approved a ₹37,500-crore incentive package.

What is coal gasification?

Coal gasification entails the conversion of coal into synthetic gas, or syngas, which can be further used to produce downstream products such as urea, methanol, ammonium nitrate, synthetic natural gas (SNG), hydrogen, ether, and dimethyl, among others.

According to government data, India possesses approximately 401 billion tonnes of coal and about 47 billion tonnes of lignite. The rationale behind coal gasification is greater utilisation of these resources, besides putting in place a sustainable mining method to produce the downstream products. This, the government believes, will reduce import dependence.

According to the Union Coal Ministry, India imports one-fifth of its urea requirement, almost its entire ammonia requirement, and approximately 80-90% of its methanol requirement.

The Ministry has set itself a target of gasifying 100 million tonnes of coal by 2030. With the recently announced scheme in place, the government aims to support the gasification of about 75 million tonnes of coal and/or lignite to reach its 2030 target.

Where does India stand with coal gasification at present?

Before the ₹37,500-crore package was announced this year, the government had approved an ₹8,500 crore package in January 2024. Of this, ₹6,233 crore has been disbursed to eight projects owned by private sector and public-sector undertakings. These include projects being executed through separate joint ventures of Coal India with Bharat Heavy Electricals and Gas Authority of India Ltd, as well as Coal India’s own project in Western Coalfields. Private-sector participants include companies such as Jindal Steel and Greta Energy and Metal.

The Talcher Coal-based Ammonia-urea complex is expected to be commissioned in FY2027-28. The others that include conversion of coal to syngas, ammonium nitrate, direct reduced iron, ethanol, and hydrogen are expected to be commissioned in FY2029-30. In April this year, in response to a query from The Hindu, the Ministry had stated that “in the coming months, more projects are expected to be sanctioned”.

Where does India stand with respect to the technology for coal gasification?

Large-scale commercial deployment of gasification in India hinges on navigating issues such as the high ash content of coal, variability in its gross calorific value, and the presence of complex mineral matter, all of which can impede the gasification process. This is why fluidised-bed gasification is considered particularly suitable for Indian coal. The technology utilises a gas stream that lifts the coal out of ash, thereafter gasifying it with heat.

The high-ash content of Indian coal also differentiates the gasification technology that could be employed in India from that in other countries such as China, which is the world leader in gasification, Australia, or the U.S.

Another aspect relates to the adequate presence of indigenous technology. By their very nature, coal gasification projects are highly capital-intensive and involve long gestation periods. According to independent research by the Chintan Research Foundation (published March 2026), “Recent techno-economic assessments of circulating fluidised bed gasifiers in the Indian context indicate that capital costs constitute the largest share of syngas production costs, accounting for nearly 30% of the total production costs.” Thus, financial viability becomes particularly imperative. It is for this reason that the latest package, which provides financial incentives amounting to one-fifth of plant and machinery costs, is essential.

For perspective, state-owned Bharat Heavy Electricals Ltd has developed their pressured fluidised bed gasifier technology tailored specifically to handle the high ash content and variability of Indian coal. Additionally, according to Niti Aayog, its 16 facilities are capable of producing all the critical components required for gasification. In the private sector, Jindal Steel Ltd and Greta Energy and Metal have been able to indigenise about 80–90% of their production. Naveen Ahlawat, Head of Sustainability and Decarbonisation at Jindal Steel, said: “It (indigenising technology) will save costs; your project cost will come down by 30-40%.”

At its maturing stages, coal gasification may still require technological imports. It for this reason that industry has also sought the government’s consideration of exemptions from provisions of the Department for Promotion of Industry and Internal Trade for acquiring necessary technologies, especially from China. Officials said that the Ministry would support participants in securing clearances for technology imports, though the regulatory requirement will continue.