India’s coal gasification incentive scheme is likely to receive government approval for an outlay of approximately ₹37,500 crore, CNBC Awaaz reported on May 13, in what would be a significant policy push to accelerate the country’s coal-to-chemicals and clean syngas agenda.
What is the coal gasification incentive scheme?
Coal gasification is the process of converting coal into syngas — a mixture of hydrogen, carbon monoxide, and carbon dioxide — that can be used as a feedstock for chemicals, fertilisers, fuels, and power generation. Unlike direct coal combustion, gasification captures the chemical energy of coal in a cleaner, more versatile intermediate form that reduces direct emissions and enables downstream value-added chemical manufacturing.
A ₹37,500 crore incentive package — if approved — would be one of the largest single sectoral production-linked or capital-linked incentive schemes in India’s industrial policy landscape outside of semiconductors and electronics. The scale of the outlay reflects the capital intensity of gasification projects, which require significant upfront investment in gasifiers, air separation units, syngas cleaning systems, and downstream conversion facilities before generating any revenue.
The approval would directly benefit companies operating in or planning to enter India’s coal gasification space. L&T Energy Hydrocarbon — which recently won a significant EPC order from Bharat Coal Gasification and Chemicals Limited for a coal-to-ammonium nitrate project in Odisha — is among the EPC players positioned to benefit from accelerated gasification project development. BCGCL itself, a joint venture of Coal India Limited and BHEL, is among the primary intended beneficiaries of the government’s coal gasification push.