Govt invites bids for coal gasification projects under ₹8,500-cr scheme
New Delhi, Oct 1, 2025
The coal ministry has launched the second round of financial incentives, offering Rs 2,366 crore to support coal and lignite gasification projects and promote cleaner coal use
The government has invited bids from companies to set up coal gasification projects under the Rs 8,500 crore incentive scheme aimed at supporting investments and promoting the use of clean coal technologies. The coal ministry has launched the request for proposals (RFPs) under the second round of financial incentives for utilisation of the balance fund of Rs 2,366 crore from the total outlay of Rs 8,500 crore under the scheme.
The ministry has sought applications under two separate categories — one for private sector companies and public sector undertakings (PSUs), and the other for demonstration projects and small-scale product-based plants.
India has one of the largest coal reserves in the world, and the government aims to utilise the resource optimally while reducing carbon emissions. The coal ministry is implementing the scheme to provide financial support for coal and lignite gasification projects. The objective is to demonstrate financial and technical viability, accelerate markets for downstream products, and create additional value in the economy through coal.
“The scheme is intended to incentivise potential investors to set up large-scale coal or lignite gasification facilities with emphasis on maximum value addition, quality output, and achieving pre-committed capacity levels within a defined timeframe, along with development of indigenous coal gasification technology,” the RFP said.
Coal gasification converts coal into synthetic gas, or syngas, which can be used to produce downstream products including fertilisers, methanol, and synthetic natural gas. It offers a cleaner use of coal compared to traditional burning.
Speaking at an industry event last week, the coal ministry’s additional secretary, Sanoj Kumar Jha, said industry interest in coal gasification is encouraging. “Several foreign companies are showing interest as they see potential in coal gasification,” he said.
At the same event, additional secretary Rupinder Brar said the ministry is preparing a structured framework for allocating coal blocks specifically for gasification and is coordinating with multiple agencies to ensure a robust regulatory environment.
[The Business Standard]
