In a significant move to promote cleaner and more efficient use of coal and lignite resources, the Government of India has rolled out a comprehensive incentive scheme worth Rs 8,500 crore aimed at supporting gasification projects in both the public and private sectors. The initiative, approved on January 24, 2024, underscores the government’s commitment to transitioning toward a low-emission energy landscape while ensuring energy security.
Union Minister of Coal and Mines Shri G. Kishan Reddy shared the details of this strategic initiative in a written reply in the Rajya Sabha today.
Key features of the initiative
The newly launched incentive scheme is designed to accelerate the adoption of coal and lignite gasification technology across the country. The scheme is structured into three categories, each targeting specific segments of the sector:
- Category I: Allocated ₹4,050 crore exclusively for Public Sector Undertakings (PSUs). Three PSU projects have been approved, each receiving ₹1,350 crore in government assistance.
- Category II: With a provision of ₹3,850 crore for both private entities and PSUs, three private sector projects have secured a total of ₹1,983.06 crore in support.
- Category III: Focused on smaller and demonstration projects, ₹600 crore has been earmarked. One private sector project has been approved under this category with ₹100 crore in assistance.
Strategic Joint Ventures and Policy Reforms
To further strengthen the gasification ecosystem, Coal India Limited (CIL) has received approval to invest in two joint ventures—CIL-BHEL and CIL-GAIL—dedicated to undertaking large-scale gasification projects. Both joint venture entities have now been formally established and are set to play a pivotal role in the development of indigenous gasification technology.
In addition, the government had earlier introduced a new sub-sector titled “Production of Syngas leading to coal gasification” under the Non-Regulated Sector (NRS) linkage auction policy in 2022. This move was aimed at ensuring affordable coal supply to gasification projects.
Gasification projects commissioned within the next seven years will benefit from coal supply at the regulated sector’s notified floor price, a move expected to attract greater investment. Furthermore, a 50% rebate in revenue share has been offered in commercial coal block auctions, provided at least 10% of the mined coal is used for gasification.
Technology transfer and global collaboration
Recognizing the need for advanced technologies, the government has also introduced a framework to grant case-by-case waivers for the transfer of technology (ToT) from countries sharing land borders with India. So far, one such waiver has been granted, facilitating easier access to critical know-how in the gasification domain.
A step towards energy diversification
These initiatives are part of a broader government strategy to diversify India’s energy mix and promote environmentally friendly industrial processes. By encouraging coal gasification, the government aims to reduce reliance on imported natural gas and promote domestic syngas production, which can be used in fertilizers, chemicals, and other value-added sectors.
With seven projects already approved across the three categories and policy frameworks in place to support further investment, India is positioning itself to become a leader in clean coal technology and coal gasification.
