The Indian Ministry of Coal predicts that the country will become significantly less dependent on foreign suppliers of natural gas, methanol, ammonia, and other critical products once gasification technology is widely implemented in the country.

“The ministry is considering a comprehensive scheme to promote coal/lignite gasification projects for public and the private sectors with an outlay of Rs 6,000 crore,” it said.

According to the statement, a competitive and open bidding process would be used to select firms to participate in the coal/lignite gasification programme.

The strategy consists of two parts. First, PSUs will get funding from the government, and then both PSUs and the private sector will contribute to the second phase of the project.

A tariff-based bidding process, with criteria developed in cooperation with Niti Aayog, will be used to choose at least one project under this segment.

Third, the statement noted that funding would be made available for demonstration projects that use indigenous technology and/or small-scale product-based gasification units.

A further incentive being considered by the ministry is the reimbursement of the Goods and Services Tax (GST) compensation cess on coal used in gasification projects for a period of 10 years after the commercial operational date (COD), assuming the GST compensation cess is extended beyond FY27.

To compensate for the fact that businesses can’t use the associated input tax credit, the government is offering a financial bonus. The coal gasification goal of 100 MT set by the ministry is expected to be met by the end of the fiscal year 2030.

The ministry believes that this programme has the potential to reduce carbon emissions and promote sustainable practises, therefore helping to fulfil the country’s global obligations to a greener future.

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