The push for coal gasification in India is gaining traction, highlighted by the involvement of major companies like Adani Enterprises and NTPC in the government’s ₹37,500 crore initiative to support surface coal and lignite gasification projects.
According to the Ministry of Coal, seven applications have been received in the initial phase. NTPC has proposed a synthetic natural gas (SNG) project, while Adani has put forth three proposals for urea production. Other participants include Gallantt Ispat focusing on direct reduced iron and syngas, Shyam Sel & Power for syngas, and Talcher Fertilisers for urea.
This initiative primarily seeks to diminish India’s reliance on imports of liquefied natural gas (LNG), urea, ammonia, methanol, and other chemicals. Currently, India imports over 50% of its LNG, 20% of its urea, and 100% of its ammonia, alongside 80-90% of methanol. Collectively, these imports were valued at approximately ₹2.77 lakh crore in FY25.
Coal gasification transforms coal into syngas, which is a blend of carbon monoxide, hydrogen, carbon dioxide, and methane, and can subsequently be utilized to generate electricity, fuels, fertilizers, methanol, ammonia, and other chemicals.
Approved by the Union Cabinet on May 13, 2026, the scheme offers incentives up to 20% of the costs for plant and machinery, and extends the coal linkage period to 30 years. This is projected to spur investments in the range of ₹2.5-3 lakh crore. The incentives are to be disbursed in four equal payments tied to project milestones, with individual project support capped at ₹5,000 crore, ₹9,000 crore for a single product (excluding SNG and urea), and ₹12,000 crore for a single entity across multiple projects.
The program aligns with the national goal of achieving 100 million tonnes of coal gasification capacity by 2030, which includes 75 million tonnes earmarked for development under this scheme. It builds on the National Coal Gasification Mission and a previous ₹8,500 crore initiative approved in January 2024, which is currently implementing eight projects.
Atanu Mukherjee, CEO of Dastur Energy, a US-based new energy firm, notes that the entry of major players like Adani and NTPC represents a pivotal change for the industry. “This signifies that coal gasification is being recognized as a viable industrial investment rather than merely a policy-driven effort,” he states.
Despite having rich coal reserves, India still relies heavily on imported gas and industrial feedstocks. Mukherjee elaborates, “Gasification presents an opportunity to transform a domestic resource into higher-value products and lessen our dependence on imports.”
However, the success of this initiative will rely on the financial viability of the projects. Gasification plants require substantial capital investment, and their success depends on the suitability of technology for Indian coal, adequate scale, long-term product off-take agreements, competitive financing, and efficient carbon management. While government incentives can mitigate initial risks, projects must ultimately deliver sustainable profits without ongoing reliance on subsidies.
Mukherjee adds, “If the first series of projects can validate this economic model, it may unlock a broader investment cycle in coal-to-chemicals, gas, fertilizers, and other industrial feedstocks, thus enhancing India’s energy and raw material security.”
Several coal gasification projects are already underway. Notably, Talcher Fertilisers in Odisha, a collaboration among Coal India, GAIL, Rashtriya Chemicals and Fertilisers, and Fertiliser Corporation of India, aims to produce 1.27 MMTPA of urea using high-ash coal from the Talcher coalfields mixed with pet-coke.
Additionally, Bharat Coal Gasification and Chemicals, a joint venture between Coal India and BHEL, is developing a plant in Lakhanpur, Odisha, with an investment of ₹11,782 crore to produce 2,000 tonnes of ammonium nitrate per day.
Another joint venture between Coal India and GAIL is working on the Coal Gas India Sonepur Bazari coal-to-SNG project in West Bengal, which will generate 1.83 MMSCMD of syngas using coal from the Sonepur Bazari and Raniganj regions, involving an investment of ₹13,052.81 crore. Coal India also plans a similar 1.83 MMSCMD syngas project at Niljai in Maharashtra with a budget of ₹12,214.86 crore.
There are numerous other projects in various stages of planning and execution.
Coal gasification is a well-established technology, historically utilized in Germany during World War II and later in the US, South Africa, Saudi Arabia, and China, with the latter currently being the global leader, gasifying about 340-350 million tonnes of coal annually to produce methanol, ammonia, hydrogen, SNG, and other chemicals.
India’s challenge lies in adapting this technology to its specific coal characteristics. The quality of feedstock, particularly the high ash content, poses a significant challenge. Consequently, domestic projects are designed to utilize configurations that are compatible with Indian coal rather than relying on off-the-shelf foreign technologies. The Lakhanpur project employs BHEL’s Pressurised Fluidised Bed Gasification technology, whereas Jindal Steel and Power’s Angul facility utilizes Lurgi fixed-bed dry-bottom gasifiers.
Additionally, the economic viability of these projects will need to contend with competition from alternative feedstocks. Several coal gasification initiatives in the US have struggled to remain competitive following the shale gas boom, which has significantly increased the availability of low-cost natural gas.
