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The Union cabinet on Wednesday approved a ₹37,500 crore coal gasification scheme that aims to convert India’s vast coal and lignite reserves into synthesis gas for use as fuel and in the manufacture of fertilisers, chemicals and other products — cutting the country’s dependence on costly energy imports.The Gevra mines in Chhattisgarh, Asia's largest opencast coalmine. (Reuters)The scheme targets gasification of approximately 75 million tonnes (MT) of coal and lignite, advancing the national goal of gasifying 100 MT by 2030. India’s import bill for key substitutable products — liquefied natural gas (LNG), urea, ammonium nitrate, ammonia, coking coal, methanol, dimethyl ether (DME) and others — stood at approximately ₹2.77 lakh crore in FY25, a vulnerability the government says has been further exposed by the ongoing geopolitical situation in West Asia.Union information and broadcasting minister Ashwini Vaishnaw, who briefed the media after the cabinet meeting chaired by Prime Minister Narendra Modi, called it a “major decision” towards self-reliance in gas. “Coal is abundantly available in India,” he said, adding that the country holds 401 billion tonnes of known coal reserves — enough for the next 200 years. India currently produces natural gas sufficient to meet only half its requirements, with the rest imported, he said.India’s import dependence for urea stands at 20%, for ammonia at nearly 100%, and for methanol at about 90%. The country imports over 50% of its LNG requirements.Under the scheme, investors will receive a financial incentive of up to 20% of the cost of plant and machinery, disbursed in four equal instalments tied to project milestones. Eligible investors will be selected through competitive bidding, with an evaluation framework benchmarking project cost, coal input, and syngas output.The incentive for any single project is capped at ₹5,000 crore; for any single product — except synthetic natural gas (SNG) and urea — ₹9,000 crore; and for any single entity group across all projects at ₹12,000 crore. The scheme is technology-agnostic, though adoption of indigenous technologies is encouraged.In an accompanying reform, the government has extended coal linkage tenure to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector of the non-regulated sector (NRS) linkage auction framework, providing long-term policy certainty for investors.The government launched its coal gasification mission in 2020, set the 100 MT target for 2030, and approved two flagship joint venture projects — a CIL-GAIL coal-to-SNG plant in West Bengal and a CIL-BHEL coal-to-ammonium nitrate plant in Odisha, together worth over ₹24,000 crore — at a Cabinet meeting in January 2024. Neither has produced commercial output. The entire ₹300 crore allocated for coal gasification in FY26 remained unspent as of January 2026, HT reported on April 14 citing government records.The government expects the scheme to now mobilise investment of about ₹3 lakh crore and generate approximately 50,000 direct and indirect jobs across 25 projects in coal-bearing regions. Coal and lignite utilisation under the scheme is projected to yield ₹6,300 crore annually in exchequer revenue, in addition to downstream GST and other levies.India holds one of the world’s largest coal reserves — over 401 billion tonnes — alongside lignite reserves of about 47 billion tonnes. Coal accounts for over 55% of the country’s energy mix. Gasification converts coal and lignite into synthesis gas, a feedstock for producing fuels, fertilisers, and chemicals domestically, enabling India to substitute high-value imports and reduce exposure to global supply disruptions and price volatility.