Govt invites bids under ₹37,500-crore coal gasification incentive scheme

The Ministry of Coal on Wednesday invited applications under the Centre's ₹37,500-crore incentive scheme to promote surface coal and lignite gasification projects, with the last date for submission of proposals set as September 7.

The scheme, approved by the Union Cabinet in May, aims to encourage the conversion of domestic coal into synthesis gas (syngas) for producing cleaner fuels, fertilisers such as urea and a range of industrial chemicals, while reducing India's dependence on imports.

In a statement, the ministry said it has issued a Request for Proposal (RFP) inviting eligible entities to participate under the Scheme for Promotion of Surface Coal/Lignite Gasification Projects.

"The Ministry of Coal is inviting applications under the Scheme for Promotion of Surface Coal/Lignite Gasification Projects, approved by the Government on 13 May 2026 with a total financial outlay of ₹37,500 crore," it said.

The initiative, according to the government, is aimed at promoting surface coal and lignite gasification projects to enhance value addition, reduce import dependence and support India's efforts towards greater self-reliance in the energy and chemical sectors.

The scheme guidelines were issued on June 25, followed by publication of the RFP on July 7.

To facilitate stakeholder participation and clarify provisions of the scheme and the application process, the ministry will hold a pre-application conference on July 20.

According to the government, financial incentives of up to 20% of the cost of plant and machinery will be provided through a competitive bidding process.

The total support is expected to facilitate gasification of around 75 million tonnes of coal and lignite.

The incentive for an individual project has been capped at ₹5,000 crore, while any one entity group can receive a maximum of ₹12,000 crore across multiple projects.

India has one of the world's largest coal reserves, estimated at around 401 billion tonnes, along with lignite reserves of about 47 billion tonnes. Coal currently accounts for more than 55% of the country's energy mix.

The government expects the scheme to mobilise investments of ₹2.5 lakh crore to ₹3 lakh crore by encouraging the production of cleaner fuels and chemicals from domestic coal, helping substitute imports of LNG, urea, ammonia, ammonium nitrate, methanol and coking coal.