The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Scheme for Promotion of Surface Coal and Lignite Gasification Projects with a financial outlay of Rs 37,500 crore. The scheme seeks to incentivise projects capable of gasifying around 75 million tonnes (MT) of coal and lignite, contributing to India's broader national target of achieving 100 MT coal gasification by 2030. Coal gasification converts coal into synthesis gas, which can substitute imported industrial feedstock and fuels. India imports more than 50 per cent of its liquefied natural gas (LNG) consumption, the entirety of its ammonia requirement, 80 to 90 per cent of methanol and around 20 per cent of urea. By promoting domestic gasification, the scheme aims to strengthen energy security and reduce the foreign exchange outgo on these critical imports. Under the scheme, financial incentives will be provided at up to 20 per cent of the cost of plant and machinery for eligible projects. Incentives for a single project are capped at Rs 5,000 crore, while a single-entity group across multiple projects can receive a maximum of Rs 12,000 crore. The government expects the scheme to attract investment of between Rs 2.5 trillion and Rs 3 trillion across nearly 25 projects. The initiative supports the Atmanirbhar Bharat vision by building indigenous capacity in clean coal technology, generating employment and developing a domestic ecosystem for syngas-based industries. It is implemented by the Ministry of Coal and complements India's broader energy transition and industrial self-reliance objectives.
Union Cabinet Approves Rs 37,500 Crore Scheme for Promotion of Surface Coal and Lignite Gasification Projects Targeting 75 Million Tonnes Gasification Capacity to Cut Import Dependence on LNG Methanol Ammonia and Urea
The Union Cabinet approved a Rs 37,500 crore scheme to promote surface coal and lignite gasification projects, targeting 75 MT gasification capacity to reduce import dependence on LNG, ammonia, methanol and urea, with incentives up to 20 per cent of plant and machinery cost.
Key facts
- Financial outlay of Rs 37,500 crore approved by the Union Cabinet for coal and lignite gasification
- Targets gasification of around 75 MT of coal, supporting the national goal of 100 MT by 2030
- Incentive of up to 20 per cent of plant and machinery cost; single project cap Rs 5,000 crore, group cap Rs 12,000 crore
- Aims to cut imports of LNG (over 50 per cent), ammonia (100 per cent), methanol (80-90 per cent) and urea (20 per cent)
- Expected to attract Rs 2.5 to Rs 3 trillion investment across nearly 25 projects
- Implemented by the Ministry of Coal under the Atmanirbhar Bharat vision
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Practice MCQ from this story
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Consider the following statements regarding the Scheme for Promotion of Surface Coal and Lignite Gasification Projects approved in May 2026:\n1. The scheme has a financial outlay of Rs 37,500 crore.\n2. It targets gasification of around 75 MT of coal and lignite.\nWhich of the statements given above is/are correct?
The scheme approved by the Union Cabinet has a financial outlay of Rs 37,500 crore and targets gasification of around 75 MT of coal and lignite, supporting the national goal of 100 MT by 2030. Both statements are correct.
Source: Press Information Bureau
Frequently asked questions
What is the financial outlay of the surface coal and lignite gasification scheme?
The Union Cabinet approved a financial outlay of Rs 37,500 crore for the Scheme for Promotion of Surface Coal and Lignite Gasification Projects.
What is the national coal gasification target?
The scheme targets gasification of around 75 MT of coal and lignite, contributing to India's broader national goal of achieving 100 MT coal gasification by 2030.
Which imports does the scheme aim to substitute?
It aims to reduce import dependence on LNG (over 50 per cent imported), ammonia (entirely imported), methanol (80-90 per cent imported) and urea (around 20 per cent imported).
What is the incentive structure under the scheme?
Incentives are up to 20 per cent of the cost of plant and machinery, capped at Rs 5,000 crore for a single project and Rs 12,000 crore for a single-entity group across projects.
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