Cabinet clears Rs 37,500 crore coal gasification incentive scheme

Coal gasification involves converting coal or lignite into synthesis gas or syngas, which can then be used to produce fuels, fertilisers, synthetic natural gas and chemicals domestically.

Official sources said that the scheme would generate around 50,000 direct and indirect jobs, particularly in coal-bearing regions. It also estimated annual revenue generation of around Rs 6,300 crore from coal and lignite utilisation under the scheme, excluding additional downstream revenues from goods and services tax (GST) and other levies.

Under the scheme, financial incentives will be provided at up to 20 per cent of the cost of plant and machinery for eligible projects. However, incentives for a single project will be capped at Rs 5,000 crore, while incentives for any single entity group across projects will be capped at Rs 12,000 crore. The incentive for any single product category, except synthetic natural gas and urea, has been capped at Rs 9,000 crore.

The government said project selection would be carried out through a transparent competitive bidding process based on the benchmarking of project cost, coal input and syngas output. The incentive will be disbursed in four equal instalments linked to project milestones.