Why in News The Union Cabinet, chaired by Prime Minister Narendra Modi, on May 13, 2026 approved a Rs 37,500 crore scheme to promote coal and lignite gasification in India. The scheme targets gasification of about 75 million tonnes (MT) of coal/lignite, offering a capital subsidy of up to 20 per cent of plant and machinery cost for new surface-gasification units. Implementing Ministry is the Ministry of Coal.
Scheme Highlights
| Parameter | Detail |
|---|---|
| Outlay | Rs 37,500 crore |
| Target gasification | ~75 MT of coal/lignite |
| Capital subsidy | Up to 20 per cent of plant and machinery cost |
| Expected private investment | Rs 2.5-3 lakh crore |
| Expected employment | ~50,000 direct/indirect |
| Expected annual revenue addition | ~Rs 6,300 crore |
| Implementing Ministry | Ministry of Coal |
| Eligible categories | Public sector (CIL, NLCIL, SCCL), private players, joint ventures |
The scheme aligns with the National Target of 100 MT coal gasification by 2030, set under the National Coal Gasification Mission conceptualised in 2020.
What Is Coal Gasification?
Coal gasification is a thermo-chemical process that converts carbonaceous fuel into a gaseous fuel called syngas (synthesis gas – a mixture of carbon monoxide (CO) and hydrogen (H2)) at high temperature in a controlled oxygen / steam environment in a vessel called a gasifier.
Reactions (simplified)
- C + H2O -> CO + H2 (water-gas reaction)
- C + (1/2) O2 -> CO (partial oxidation)
- CO + H2O -> CO2 + H2 (water-gas shift)
Surface vs Underground
| Type | Description |
|---|---|
| Surface gasification | Coal is mined, fed into an above-ground gasifier – the scheme’s principal focus; mature technology |
| Underground Coal Gasification (UCG) | In-situ conversion of unmineable coal seams; experimental in India; tested at Vastan (Gujarat) |
Downstream Uses of Syngas
| Product | Industrial relevance |
|---|---|
| Urea (via ammonia synthesis) | Fertiliser self-reliance – India imports ~25-30 per cent of urea |
| Methanol | Blending with petrol; under NITI Aayog Methanol Economy programme since 2016 |
| Synthetic Natural Gas (SNG) | Pipeline gas replacement |
| Direct Reduced Iron (DRI) | Sponge-iron route in steel-making (replaces coking coal) |
| Hydrogen | Feedstock for refining; blue/turquoise hydrogen route with CCUS |
| Olefins (ethylene, propylene) | Petrochemical complexes |
Why It Matters – Strategic Logic
Import Substitution
- India imports nearly 220 MT of coal annually (most coking coal for steel)
- Imports of LNG (~26-30 MMT), urea (~70-80 lakh tonnes), methanol (~2-3 MMT), ammonia can be substituted
- Reduces forex outgo; FY 2024-25 oil + gas import bill was ~USD 180-185 billion
Domestic Coal Mobilisation
- India has the 5th largest coal reserves globally – ~300+ billion tonnes proven (BCCL/CIL geological reserves)
- Most reserves are non-coking, high-ash thermal coal – not suitable for steel but well-suited for gasification
- Captive mines and Mine Developer & Operator (MDO) framework can supply new gasification units
Strait of Hormuz Hedge
- April-May 2026 has seen elevated fuel WPI (24.71 per cent YoY)
- Coal-derived methanol and SNG offer a partial energy hedge against tanker disruption
Implementing Architecture
Ministry of Coal
- Created in 1957; current Minister G. Kishan Reddy
- Allied PSUs: Coal India Limited (CIL), NLC India Ltd (lignite – Neyveli), Singareni Collieries Company Ltd (SCCL) – JV between Telangana Government and Centre
- The scheme will be administered through a new Empowered Committee
Coordination with Other Ministries
- MoEFCC – Environmental Clearance, Forest Clearance, Forest (Conservation) Amendment Act, 2023
- MoP&NG – syngas integration with refining; methanol blending standards (BIS IS 17076)
- MoNRE – green-hydrogen linkages (avoid double-counting under NGHM)
- MNRE / DST – CCUS R&D
Environmental Trade-Offs
Coal gasification is not carbon-zero – it merely shifts the carbon penalty.
| Indicator | Position |
|---|---|
| Direct emissions | CO2-intensive; comparable to combustion |
| With CCUS | Can become “clean coal” – captured CO2 used in chemicals/EOR |
| Local pollution | Sulfur dioxide, slag, tar – but lower than direct combustion |
| Ash | High-ash Indian coal produces large ash mountains |
The scheme implicitly assumes a CCUS layering in the medium term – aligned with India’s net-zero target of 2070 (announced at COP26 Glasgow 2021).
Reserves and Production Snapshot
| Country | Coal reserves rank |
|---|---|
| United States | 1 |
| Russia | 2 |
| Australia | 3 |
| China | 4 |
| India | 5 |
India produced ~997 MT of coal in FY 2024-25 (highest ever); FY 2025-26 production target ~1 billion tonnes. Coal India Limited accounts for ~75 per cent of national output.
Lignite – the Brown Coal Story
Lignite reserves are concentrated in:
- Neyveli (Tamil Nadu) – principal producer via NLCIL
- Mata-no-Madh, Panandhro (Gujarat)
- Barsingsar (Rajasthan)
- Akrimota (Gujarat) – captive
Lignite has lower carbon content (~25-35 per cent) but higher moisture – gasification economics differ from bituminous coal.
UPSC Relevance
GS Paper 3 – Indian Economy and Infrastructure, Environment
- Energy security; import substitution
- Domestic mineral resources and mineral policy
- Industrial subsidies and viability gap funding
- Climate trade-offs in coal-based pathways
GS Paper 2 – Government policies and intervention
- Cabinet-approved schemes; CCS architecture
- Coal Ministry – PSUs and regulatory framework
Mains Angles
- Discuss the rationale and trade-offs of the Rs 37,500 crore Coal Gasification Scheme. Is “clean coal” a credible bridge to net-zero by 2070?
- India’s coal reserves are the 5th largest globally but skewed to thermal grades. Examine how gasification reconfigures their economic value.
- Coal gasification can substitute imports of urea, methanol, ammonia, LNG and coking coal. Critically evaluate this assertion.
Facts Corner – Knowledgepedia
Syngas: A mixture of CO + H2 produced from coal/biomass gasification; feedstock for ammonia, methanol, SNG, hydrogen, DRI.
Coal India Limited (CIL): Statutory PSU created via the Coal Mines (Nationalisation) Act, 1973; world’s largest coal producer.
NLC India Ltd: Erstwhile Neyveli Lignite Corporation; under Ministry of Coal; lignite mining at Neyveli, Barsingsar.
SCCL: Singareni Collieries Company Ltd; JV of Telangana Government (51 per cent) and Government of India (49 per cent).
National Coal Gasification Mission: Government target of 100 MT gasified coal/lignite by 2030.
National Methanol Economy Programme: Launched by NITI Aayog in 2016; targets methanol blending (M15) and gasification-to-methanol value chains.
CCUS: Carbon Capture, Utilisation and Storage; central to the “clean coal” thesis.
PM-PRANAM: Programme for the Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth – promotes alternatives to chemical fertilisers; complements urea import substitution.
Net-Zero: India’s net-zero target year is 2070 (COP26 Glasgow, November 2021); 2030 NDCs include 50 per cent non-fossil capacity and 45 per cent emissions-intensity reduction.
Mineral Policy: National Mineral Policy 2019; Mines and Minerals (Development and Regulation) Amendment Act, 2023 – private exploration in critical minerals.
Lignite: Brown coal with high moisture, lower carbon (25-35 per cent); principal Indian deposits in Tamil Nadu, Gujarat, Rajasthan.
