The first round of the Centre’s ₹37,500-crore coal gasification scheme has closed with seven proposals spanning urea, synthetic natural gas, syngas and DRI.
For most of us, coal has one familiar destination: the power plant.
That association has shaped India’s energy story for decades. Coal has powered industries, supported the electricity grid, and remained central to meeting the country’s growing demand for power.
The Government is now encouraging industry to consider coal in a different role. Through coal gasification, coal or lignite can be converted into syngas, which can then be used as a feedstock for products such as urea, synthetic natural gas, and other industrial applications.
The importance of this technology lies in what happens after the coal has been converted. It creates a route through which a domestic resource can enter other parts of the industrial value chain.
That idea is behind the ₹37,500-crore scheme approved by the Union Cabinet in May 2026. The first application round has now closed with seven proposals from five applicants. Their choice of products offers an early indication of where companies see an opportunity.
Whether those opportunities can support viable businesses will take much longer to establish.
Coal has another possible role
India has large domestic coal resources and continues to import substantial quantities of products including LNG, urea, ammonia and methanol. The Government has estimated the value of key substitutable imports at around ₹2.77 lakh crore in FY 2024-25.
Coal gasification creates a possible connection between those two realities. Coal can be converted into syngas and then used in processes that produce industrial commodities India already consumes in large quantities.
The Government is therefore using public support to encourage an industrial pathway around a resource that has traditionally been associated with electricity generation.
The scale of the intervention is considerable. The scheme seeks to support around 75 million tonnes of coal and lignite gasification capacity by 2030, contributing to the broader national target of 100 million tonnes. The Government expects the programme to catalyse investments of around ₹2.5 lakh crore to ₹3 lakh crore across approximately 25 projects.
The financial incentive can cover up to 20% of the cost of plant and machinery, subject to specified caps and milestone conditions. The scheme also provides a longer coal-linkage tenure for qualifying gasification projects, giving developers greater visibility over a critical input.
These measures address some of the risks involved in establishing an entirely new industrial pathway. They do not, however, create the market for the products that those plants will eventually have to sell. That is where the first round becomes particularly interesting.
The first applications reveal where industry sees value
The seven proposals do not describe a single emerging business model.
Adani Enterprises has submitted three proposals, all for urea. Talcher Fertilisers has also proposed a urea project. NTPC has applied for synthetic natural gas, while Gallantt Ispat has proposed direct reduced iron and syngas. Shyam Sel & Power has applied for syngas.
Although the technology is shared, the industrial logic behind the projects is different.
The urea proposals connect gasification with India’s large and strategically important fertiliser market. Synthetic natural gas creates a potential route into the country’s gas economy. The DRI and syngas proposal takes the technology into the steel value chain.
This changes how the seven applications should be read. They are not simply seven companies responding to a government incentive. They represent several attempts to place gasification inside existing industrial businesses, each with its own feedstock requirements, product markets, capital structure, and price pressures.
The commercial question for a urea project will look different from that for synthetic natural gas. A steel-related project will face another set of considerations.
In that sense, the first round is testing whether domestic coal can become an economically useful input further along India’s industrial value chains.
The Ministry received seven applications from five applicants, with three proposals coming from Adani Enterprises. Future rounds will show whether participation broadens across more companies and industrial applications. Round 2 has already opened, with subsequent rounds planned at two-month intervals.
The technology may work. The business still has to work.
This is where the distinction between technological possibility and industrial economics becomes important.
A gasification project has to bring together a reliable coal or lignite supply, suitable technology, environmental approvals, substantial capital and an offtake arrangement. The developer is responsible for arranging the feedstock and selling the resulting products.
The scheme’s design recognises these requirements. Financial support is released against milestones covering land, environmental clearance, coal or lignite arrangements, technology and EPC arrangements, financial closure, expenditure, commissioning and subsequent production.
Applications are also evaluated on factors including the proposed incentive, plant capacity, project cost, technology tie-up and financial capability.
Government support can improve the starting economics of a project. But it cannot determine whether the resulting product will remain competitive once the plant is operating.
Consider the different proposals. Urea has its own market and policy framework. Synthetic natural gas will have to make sense against alternative sources of gas. Syngas and DRI will ultimately be judged within industrial processes where cost, quality and reliability influence purchasing decisions.
The economics therefore extend well beyond the gasifier. A project can have access to coal, a proven technology and government support, but still face difficulty if the economics of the final product do not hold together.
That is why the eventual test for these projects will go beyond construction, and will involve sustained production, reliable operations, and a product that can compete in the market over the life of the asset.
Seven applications are an early signal
On 5 September 2026, while the first application window was still open, the Ministry responded to reports that the ₹37,500-crore scheme had attracted no takers. It pointed out that the deadline was 7 September and disclosed that NTPC and Talcher Fertilisers had already submitted applications. Four days later, the Ministry announced seven applications.
This little episode shows how quickly an assessment of a major policy initiative can form before the underlying evidence is complete. A scheme can appear to have no market interest simply because its application window has not yet closed. Once the window closes, the evidence looks different.
In this context, seven applications establish that companies are willing to commit resources to developing proposals under the scheme and to examine gasification as part of their businesses.
They tell us much less about how many plants will eventually be built, how efficiently they will operate or whether their products will generate attractive returns. But that uncertainty does not diminish the significance of the first round. It defines what the first round has actually shown.
India has spent decades building an economy around coal as a source of energy. The gasification programme is an attempt to explore another possibility: using some of that domestic resource as a starting point for industrial products.
The first seven proposals suggest that industry is willing to test the idea across fertilisers, gas and steel-related applications.
If these projects progress from applications to financed plants, from plants to sustained production, and from production to competitive products, coal gasification could begin to occupy a different place in India’s industrial economy.
For now, the country has an early market signal. The real value of that signal will become clearer only when the coal starts producing something that the market is willing to buy.
Do you see coal gasification becoming a meaningful part of India’s industrial economy?
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