India’s coal gasification programme is gaining momentum, with the Centre’s ₹37,500-crore incentive scheme drawing interest from large private and public-sector companies and setting the stage for investments of ₹2.5–3 lakh crore across the value chain.
The government aims to gasify around 100 million tonnes of coal a year, using the technology to produce higher-value products such as fertilisers, methanol, ammonia, hydrogen and synthetic natural gas (SNG), while reducing India’s dependence on imported hydrocarbons and industrial feedstocks.
The latest round of applications under the coal gasification scheme attracted significant interest from large industrial groups. Adani Enterprises Ltd (AEL) emerged as one of the largest applicants, submitting three proposals in the first round of the new scheme. According to the Ministry of Coal, all three are for coal-to-urea gasification plants. The first round attracted seven applications, with the government targeting about 25 projects and gasification of roughly 75 million tonnes of coal and lignite under the programme.
Adani plans to invest about ₹30,000 crore in large coal gasification and coal-to-chemicals projects
Adani Enterprises has applied for three coal-to-urea gasification projects under the Central Government’s ₹37,500 crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects. The Maharashtra state government has also approved a separate ₹70,000-crore coal gasification project for Adani in Nagpur.
“We are assessing the required suitable technology for coal gasification,” Jeet Adani, who heads the coal gasification plans, told Fortune India.
It is also developing a Mundra Petrochem coal-to-PVC complex, a phased 2 MMT per annum PVC project, with the first capacity of 1 MMT per annum slated for commissioning by FY28.
AEL is also teaming up with Dioxycle, a French clean-technology company specialising in chemical manufacturing, to develop and scale low-carbon chemical production. Plans are to begin with a pilot project to make formic acid using captured carbon dioxide and renewable electricity.
NTPC, India’s largest power producer, is another major participant in the gasification push. For the utility, the technology offers a way to diversify beyond conventional coal-fired generation and extract greater value from its domestic coal resource base.
The government’s push builds on its first coal-gasification incentive programme of ₹8,500 crore, under which eight projects are under implementation. These projects are expected to attract about ₹65,365 crore of investment and gasify around 12 million tonnes of coal annually.
The latest government data shows about 22.6 million tonnes a year (MTPA) of coal-gasification capacity is already operational or under implementation. This includes around 8 MTPA at Jindal Steel Ltd, 2.6 MTPA at Talcher Fertilisers and about 12 MTPA across eight projects supported under the earlier ₹8,500-crore incentive scheme.
One of the key projects is Talcher Fertilisers Ltd (TFL) in Odisha, where a coal-gasification-based urea project is under implementation. At about 2.6 MTPA of coal-gasification capacity, it is among the country’s flagship attempts to establish commercial-scale coal-to-urea production.
In coal gasification, instead of burning coal directly, coal reacts with oxygen and steam at high temperatures to produce syngas, primarily a mixture of carbon monoxide and hydrogen. The syngas can then be processed into products such as urea, methanol, ammonia, hydrogen and SNG.
The second-generation scheme, approved in May 2026, provides financial support equivalent to 20% of the cost of plant and machinery, subject to prescribed caps. Individual projects can receive up to ₹5,000 crore, while the maximum support available to an entity across projects is ₹12,000 crore.
“The Government’s ₹37,500 crore coal gasification incentive scheme provides a strong foundation for developing India’s domestic production of fertilisers, synthetic natural gas and industrial feedstocks. With envisaged investment of ₹2.5–3 lakh crore and gasification of approximately 75 million tonnes of coal and lignite annually, the programme creates a substantial opportunity to strengthen India’s industrial and energy security,” says Atanu Mukherjee, Chief Executive Officer, Dastur Energy, a specialist in coal gasification.
But financing remains a potential constraint as projects move from subsidy allocation to actual construction.
“A complementary partial credit guarantee facility would help address the debt-financing constraints that projects may encounter as they move from subsidy allocation to financial closure and execution. By enabling wider participation from financial institutions, such a facility could accelerate commercial deployment and the development of India’s coal gasification ecosystem,” says Mukherjee.
The government is pursuing the programme on two fronts—establishing large commercial and demonstration projects through public-sector companies while using financial incentives to attract private capital and technology.
Policy support has also strengthened with the government’s decision to extend the tenure of coal linkages for the syngas-producing sub-sector to 30 years under the non-regulated sector linkage auction framework. The longer linkage period is expected to provide greater certainty for projects requiring large upfront investments and long operating lives.
There is also growing interest in using surface coal gasification to produce SNG. A Coal India-GAIL project in West Bengal’s Jamuria-Durgapur industrial belt is progressing, with an estimated investment of about ₹13,000 crore and proposed annual output of around 633.66 million cubic metres of SNG.
The push comes as coal continues to play a central role in India’s energy security even as the country rapidly expands renewable energy. The Central Electricity Authority said this month that India may need 105-150 GW of additional coal-based capacity by 2035, above its earlier estimate of 97 GW, as electricity demand rises and renewable generation remains variable.