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Coal gasification ₹37,500 scheme Triggers ₹2.5-3 Lakh crore capex opportunity

ICICIdirect Research 11 Sep 2026 DISCLAIMER

Scheme size & objective: The Cabinet approved a ₹37,500 crore financial incentive scheme in May 2026 for new surface coal/lignite gasification projects. It aims to support gasification of around 75 MT of coal/lignite, contributing to India’s 100 MT coal-gasification target by 2030.  
Incentive structure: The government will provide a maximum incentive of 20% of eligible Plant & Machinery (P&M) cost. Incentive is capped at ₹5,000 crore per project and also there is a ₹9,000 crore cap per product for products other than (Synthetic Natural Gas (SNG) and Urea). Additionally the maximum incentive available to a single entity/group is ₹12,000 crore across all its projects
Coal supply support: The government has extended coal-linkage tenure to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector. Coal for gasification also gets a 50% rebate in revenue share thereby improving project economics.
The Projects has received a good response in Round 1, with seven applications from major public and private players, including NTPC, Adani Enterprises, Gallantt Ispat among others. The scheme aims to convert domestic coal/lignite into higher-value products such as syngas, methanol, ammonia, urea and hydrogen, reduce dependence on imports of LNG, urea, ammonia and methanol worth around ₹2.77 lakh crore in FY25, and support the government’s target of 100 MT coal-gasification capacity by 2030, including 75 MT under the scheme. The programme is expected to catalyze ₹2.5–3 lakh crore of investment

Investment opportunity & Potential beneficiary companies:

  • The scheme could create opportunities as projects progress towards execution
  • Thermax and BHEL could benefit from gasification technology, boilers, process equipment, and balance-of-plant requirements.
  • Engineers India could benefit through feasibility studies, consultancy etc.
  • L&T, Tata Projects could potentially participate in EPC, process equipment etc.
  • Overall, this scheme has potential to trigger ~₹2.5–3 lakh crore capital expenditure.

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