The government has greenlit incentives totaling Rs 8,500 crore for coal gasification projects in a move aimed at reaching the ambitious target of gasifying 100 million tonnes of coal by 2023 in India. The process of coal gasification involves a thermo-chemical conversion of coal into synthesis gas, or syngas, presenting an opportunity to substitute imports valued at Rs 1.3 lakh crore. This technology has the potential to produce methanol for blending with petrol, Di-Methyl Ether (DME) for LPG blending, ammonia for urea and ammonium nitrate manufacturing, and steel production through a gas-based direct reduced iron route, thereby reducing dependence on imported coking coal for blast furnace operations. Additionally, synthetic natural gas (SNG) can also be produced through this process.

Coal Minister Pralhad Joshi announced the approval, stating that the financial assistance of Rs 8,500 crore will be distributed under three categories. Given the high content of Indian coal, which limits the available gasification technology, the initiative aims to incentivize both domestic and international players to invest in coal gasification. This approach is expected to drive research and development, fostering indigenous and innovative solutions for efficient coal utilization.

As part of the decision, the Cabinet also gave the green light to the establishment of a Coal-to-SNG Project at Eastern Coalfields Limited (ECL) command area through a joint venture between Coal India Limited (CIL) and GAIL. Additionally, a Coal-to-Ammonium Nitrate Project at the Mahanadi Coalfields Limited (MCL) command area was approved through a joint venture between CIL and BHEL. Both projects are slated for completion by 2028-29, contributing to India's strategic push for cleaner and more efficient energy production from its abundant coal reserves.