The Centre is in talks with coal-bearing states to roll out dedicated incentive schemes for coal gasification projects as geopolitical tensions, volatile fuel markets and rising import dependence sharpen India’s focus on domestic industrial and energy security.
Odisha and Maharashtra have already introduced state-level incentive frameworks for coal gasification projects, while discussions are underway with states including Chhattisgarh, Uttar Pradesh, Jharkhand, Andhra Pradesh, Telangana and Assam to introduce similar policies.
The renewed push comes alongside the Centre’s recently approved ₹37,500-crore financial incentive package for surface coal and lignite gasification projects, with the government expecting investments worth ₹2.5-3 lakh crore, around 25 projects and nearly 50,000 direct and indirect jobs across coal-bearing regions.
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Speaking during the roadshow on the scheme for promotion of surface coal/lignite gasification projects, Coal and Mines Minister G. Kishan Reddy said the Centre was actively engaging with states to build a broader policy ecosystem for the sector.
“We are regularly talking to state governments… different states like Chhattisgarh, Uttar Pradesh, Jharkhand, Andhra Pradesh, Telangana, Assam, should bring such a policy. We are talking to chief ministers of these states. In some time they may also come with such incentives,” Reddy said.
Rs 2.77-lakh-crore vulnerability
The development assumes significance against the backdrop of the ongoing West Asia conflict, which has increased volatility in global LNG, fertiliser, methanol and commodity markets and exposed India’s vulnerability to supply-chain disruptions and imported fuel dependence.
Coal Secretary Vikram Dev Dutt said products that could potentially be substituted through coal gasification — including natural gas, ammonia, urea, methanol and coking coal — accounted for imports worth nearly ₹2.77 lakh crore in FY25. “If you look at the price escalation that happened in March and April, the conflict has driven prices noticeably higher, impacting all sectors of the economy,” Dutt said.
He said the import dependence and resulting foreign exchange outflows had reinforced the urgency of building domestic industrial capabilities through coal gasification.
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The secretary added that even the first set of projects approved under the earlier incentive framework had the potential to substitute around ₹20,000 crore of imports through domestic production of synthetic natural gas, ammonia, methanol, DME, hydrogen and coking coal substitutes.
“The question is not about whether we use coal, it’s about how intelligently we use coal. Coal gasification is the answer,” the secretary said.
De-risking Early Movers
The coal ministry said the new ₹37,500-crore package, along with the earlier ₹8,500-crore support scheme, aimed at derisking investments and accelerating large-scale industrial deployment of coal gasification technologies.
The secretary described the package as “not merely a fiscal support” but “a calculated strategic move to derisk early movers” and catalyse domestic industrial capabilities.
According to the ministry, the technology-agnostic structure of the scheme would allow developers flexibility in selecting commercially proven gasification technologies suited to India’s high-ash coal characteristics and downstream product requirements.
Reddy said coal gasification could significantly reduce India’s dependence on imported methanol, ammonia, fertilisers and critical industrial chemicals while strengthening domestic manufacturing across petrochemicals, hydrogen and advanced manufacturing sectors.
The minister said the government was pursuing a “Whole of Government Approach” involving ministries, state governments, PSUs, private companies, technology providers and financial institutions to accelerate implementation across the gasification value chain. Referring to the broader geopolitical backdrop, Dutt said the West Asia conflict had “fundamentally altered the geopolitics of global energy and commodity supply chains.” “The opportunity is unprecedented. The need is urgent. The support is generous. And the time is now,” he said.
TOPICSCoalMaharashtraOdishaThis article was first uploaded on May twenty-eight, twenty twenty-six, at two minutes past nine in the night.