The Indian government has formally invited bids for its ₹37,500 crore (approximately $4.5 billion) incentive scheme to promote surface coal and lignite gasification projects across the country, according to an official statement from the Ministry of Coal on Wednesday, July 8, 2026.
The scheme, approved by the government on May 13, 2026, and launched the same month, is designed to support the production of syngas and downstream value-added products such as synthetic natural gas (SNG), urea, ammonium nitrate, methanol, DME, and other chemicals. The ministry stated that the initiative will enhance the country’s energy security, reduce import dependence, and facilitate the utilization of domestic coal and lignite resources.
Key Application Timeline
The Ministry of Coal has issued a request for proposal (RFP) on July 7, 2026, with a pre-application conference scheduled for July 20. The last date for receipt of queries is July 25, and the ministry will respond to queries by August 3. The application window will close on September 7, with bid opening on September 8. The selected applicant is expected to be declared on October 21, followed by issuance of the Letter of Award (LoA) on November 4. The signing of the project agreement is scheduled for January 4, 2027.
| Event | Date |
|---|---|
| RFP issued | July 7, 2026 |
| Pre-application conference | July 20, 2026 |
| Last date for queries | July 25, 2026 |
| Ministry responds to queries | August 3, 2026 |
| Application window closes | September 7, 2026 |
| Bid opening | September 8, 2026 |
| Selected applicant declared | October 21, 2026 |
| Letter of Award issuance | November 4, 2026 |
| Project agreement signing | January 4, 2027 |
Coal Gasification as a Strategic Tool
Coal gasification is a process that converts dry fuel into synthetic gas (syngas), which can be used as an alternative fuel and helps reduce carbon emissions compared to direct coal combustion. This technology supports the production of methanol, fertilizers, hydrogen, and chemicals, cutting reliance on imports, according to the ministry.
Balasaheb Darade, Founder and Managing Director of New Era Cleantech Solutions, described coal gasification as not just an industrial opportunity but a “strategic imperative for achieving energy security, import substitution and true economic self-reliance under Atmanirbhar Bharat.” New Era Cleantech, a Maharashtra-based company, is developing a 5 MMTPA (million metric tonnes per annum) coal gasification project in Chandrapur, Maharashtra.
Industry Reaction and Expected Impact
Amrit Lal Meena, Chairman of the Gasification Technologies & Research Council of India (GTRC-India) and a former coal secretary, stated that the coal gasification scheme will “unlock greater economic value from domestic coal, improve resource efficiency, strengthen energy security and spur industrialisation through downstream industries.” He added that the industry sees the scheme as a “landmark reform that will strengthen investor confidence, reduce import dependence and position India as a global hub for coal-to-chemicals manufacturing.”
The scheme is expected to drive investments in coal-to-chemical projects, boosting domestic production of fertilizers, methanol, and synthetic fuels. For commodity traders and analysts, this signals a potential long-term shift in India’s coal consumption patterns, with increased diversion of coal from power generation to gasification, potentially affecting domestic coal pricing and import dynamics for chemicals like methanol and urea. The government’s focus on reducing import dependence may also influence global trade flows in petrochemicals and fertilizers.
For commodity markets, the scheme could reduce India’s reliance on imported natural gas (for SNG and methanol) and fertilizers, potentially softening global demand for these commodities over time. However, the immediate impact will depend on how quickly projects are implemented and how much capital is deployed under the incentive program.
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