₹6,233 crore in coal gasification incentives awarded a year ago have not led to a single project breaking ground. A new ₹37,500 crore scheme excludes first-round participants, leaving them locked into less favorable terms with no way out.
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Nearly a year after the government awarded ₹6,233 crore in incentives for coal gasification projects, not one has broken ground. Multiple task force meetings have been held. Physical construction has yet to start. The original commissioning target has been pushed out to fiscal 2030, according to people familiar with the matter.
Coal gasification converts coal into syngas for use in fertilizers, chemicals, and power generation. The government had hoped to kick-start a domestic industry and reduce imports. The companies that won the initial bids have struggled with land acquisition, technology tie-ups, and financing, the people said.
Meanwhile, a new ₹37,500 crore scheme has been launched. It offers more generous terms including higher capital subsidies and a longer support period. The first-round participants are excluded from applying. That leaves the early movers locked into less favorable terms with no way to switch.
The task force has met at least five times since the awards, minutes show. Each meeting focused on procedural hurdles – environmental clearances, coal linkage agreements, and state-level approvals. None of the projects have submitted a detailed project report, a prerequisite for disbursing the first tranche of funds.
One bidder told the task force that the original incentive structure was too low to make the projects commercially viable, given the sharp rise in equipment costs since the bids were submitted. The new scheme addresses that by offering a higher subsidy floor. It applies only to new applicants.
A senior official at the Ministry of Coal said the ministry is reviewing the old projects on a case-by-case basis. No decision has been made on whether to extend the deadline or revise the terms. The official spoke on condition of anonymity.
India imports about 15 million tonnes of coal annually for gasification, mostly from Indonesia and South Africa. The domestic push was meant to cut that bill by half over five years. That timeline now looks unrealistic.
The next deadline for the new scheme is March 2026. The government expects to receive 10 to 15 new applications by then. The old projects remain in limbo.
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