Coal Gasification Scheme and National Coal Gasification Mission Explained

14 May 2026

The Union Cabinet approved a ₹37,500 crore package to accelerate coal gasification and achieve the target of 100 million tonnes by 2030.

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About Coal Gasification Scheme

The Coal Gasification Scheme is a government initiative to promote conversion of coal and lignite into synthetic gas and value-added industrial products.
Objective: The scheme aims to strengthen energy security, reduce import dependence and encourage cleaner utilisation of domestic coal resources.
Nodal Ministry: The Ministry of Coal is the nodal ministry responsible for implementation of the Coal Gasification Scheme and National Coal Gasification Mission.
Financial Outlay: Financial package of ₹37,500 crore to support over 25 coal gasification projects targeting 75 million tonnes of gasification.
Key Features of the Scheme
- Financial Incentives: Projects will receive incentives up to 20% of plant and machinery costs, subject to prescribed financial limits.
- Project Cap: The incentive is capped at ₹5,000 crore per project and ₹12,000 crore for a single entity across all project categories.
- Investment Promotion: The scheme is expected to attract investments worth ₹2.5–3 lakh crore and generate nearly 50,000 employment opportunities.
- Competitive Bidding: Funds will be allocated through transparent competitive bidding and released in phases linked to project milestones.

About National Coal Gasification Mission (NCGM)

The National Coal Gasification Mission (NCGM) aims to convert domestic coal into cleaner synthesis gas (syngas) for industrial and energy applications.
Launch: The mission was launched during 2020–21 to promote cleaner coal utilisation and reduce dependence on imported fossil fuel-based products.
Nodal Ministry: Ministry of Coal is the nodal ministry responsible for implementing and monitoring the National Coal Gasification Mission.
Target: The mission aims to achieve 100 million tonnes (MT) of coal gasification by 2030 through public and private sector participation.
Objective: The mission seeks to reduce imports of natural gas, methanol, ammonia and fertilisers by utilising India’s large domestic coal reserves.
Technology Focus: The mission promotes conversion of high-ash Indian coal into syngas using advanced gasification technologies and cleaner industrial processes.
Expected Outcomes: The initiative is expected to support domestic manufacturing, generate employment and create value-added products such as chemicals and fertilisers.
Significance: The mission strengthens India’s energy security, industrial self-reliance and cleaner resource utilisation while supporting long-term economic growth.

About Coal Gasification

Coal gasification is the process of converting coal or lignite into synthesis gas (syngas) through high-temperature and high-pressure reactions.
Composition of Syngas: Syngas mainly contains carbon monoxide, hydrogen, carbon dioxide, methane and water vapour.
Methodologies Used: The process uses controlled oxygen and steam inside specialised gasifiers operating at temperatures of about 1,000–1,400°C.
Industrial Uses: Syngas is used to produce methanol, ammonia, urea, synthetic natural gas, fertilisers and petrochemical products.

Significance of Coal Gasification

Energy Security: Coal gasification reduces dependence on imports of LNG, methanol, ammonia and fertilisers, strengthening India’s energy self-reliance.
- India’s dependence on imports for these products is around 80-90% with import bill standing at approximately ₹2.77 lakh crore in FY2025.
Industrial Growth: The technology supports downstream industries such as chemicals, fertilisers and petrochemicals, promoting industrial diversification.
Cleaner Coal Utilisation: Gasification offers relatively cleaner utilisation of coal compared to direct combustion and can support lower emission industrial processes.
Employment Generation: Large-scale gasification projects can create employment and economic opportunities in coal-bearing regions and industrial corridors.

Challenges

High Capital Requirement: Coal gasification projects require significant investment in technology, infrastructure and plant development.
Environmental Concerns: The process involves carbon emissions, water consumption and waste management challenges requiring advanced mitigation measures.
Technology Dependence: India still relies substantially on imported gasification technologies and advanced equipment for efficient commercial-scale implementation.

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Conclusion

Coal gasification can enhance India’s energy security and industrial growth if supported by cleaner technologies, environmental safeguards and long-term policy stability.

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