Union Cabinet Approves Rs 37,500 cr Coal Gasification Scheme – Boost to Syngas Production and Energy Security

Union Cabinet Approves Major Coal Gasification Scheme The Union Cabinet on 13 May 2026 cleared a new Coal Gasification Scheme with an outlay of Rs 37,500 crore . The plan aims to support 25 surface gasification projects and to gasify about 75 million tonnes of coal/lignite, moving India closer to its target of 100 million tonnes by 2030. Key Developments Financial incentive of up to 20 % of plant‑and‑machinery cost , paid in four equal installments. The scheme adds to the earlier VGF programme of Rs 8,500 crore approved in 2024, but focuses exclusively on surface projects. Targets reduction of imports of LNG, urea, ammonia and methanol by providing domestic syngas. Supports existing projects such as Jindal Steel’s 1.80 mtpa plant in Angul, Odisha, and upcoming projects by Coal India Ltd and private players. Important Facts on Coal Gasification Coal gasification can be carried out in two ways: Surface gasification – coal is extracted first, then processed. Underground coal gasification (UCG) – coal remains underground during conversion. The resulting Syngas can be further processed into synthetic natural gas, methanol, dimethyl ether, ammonia for fertilisers, and other petro‑chemical feedstocks. UPSC Relevance Understanding this scheme is vital for GS‑3 (Economy) questions on energy security, import substitution, and public‑private partnership models. It also touches on GS‑1 (Geography) regarding India’s coal reserves – the fourth‑largest globally, with about 389 billion tonnes (of which 212 billion tonnes are proven). The policy reflects the government’s strategy to leverage domestic resources to meet growing energy demand, especially during peak summer months when coal‑based power dominates the electricity mix (>70 %). Way Forward Successful implementation will depend on timely disbursement of incentives, adherence to environmental norms, and scaling up of downstream industries that can absorb syngas. Monitoring the progress of the 25 projects and evaluating the performance of the earlier VGF scheme will guide future policy refinements. Aspirants should track related developments in the Ministry of Coal and the Ministry of Power for upcoming UPSC questions.