- NTPC, Talcher Fertilisers submit applications after muted initial response
- Govt targets INR 2.5-3 lakh crore investment, 100 mnt gasification by 2030
India’s ambitious coal gasification programme is facing an early test of industry appetite, even as the government maintains that its expanded INR 37,500 crore ($4.5 billion) incentive scheme remains on track.
The Ministry of Coal confirmed that NTPC and Talcher Fertilisers Ltd (TFL) submitted applications ahead of the first-round deadline on 7 September, countering reports that the scheme had failed to attract bids.
The clarification, however, leaves a larger question: whether the programme can attract enough commercially viable projects to support India’s target of gasifying 100 mnt of coal annually by 2030.
Govt dramatically expands support
Approved in May, the INR 37,500 crore programme targets around 75 mnt/year of new coal and lignite gasification capacity, offering support of up to 20% of eligible plant and machinery costs, capped at INR 5,000 crore per project.
The government expects the scheme to mobilise INR 2.5-3 lakh crore of investment across around 25 projects.
Gasification converts coal into syngas that can subsequently be used to manufacture products including synthetic natural gas, methanol, ammonia, urea, chemicals and synthetic fuels.
Import substitution is a major objective. The government estimates India’s FY’25 imports of products potentially substitutable through gasification at around INR 2.77 lakh crore.
Large gap remains to 2030 target
Around 22.6 mnt/year of gasification capacity was operational or under implementation as of July, including approximately 8 mnt/year at Jindal Steel, 2.6 mnt/year at TFL and around 12 mnt/year across projects supported under the government’s earlier INR 8,500 crore incentive programme.
The new scheme’s targeted 75 mnt/year could theoretically bridge much of the remaining gap to 100 mnt/year.
But supported or announced capacity is not the same as operating capacity.
Of eight projects sanctioned under the earlier incentive programme, only one — Jindal Steel’s project — had achieved financial closure and was under construction as of July, while five had completed groundbreaking and were progressing through clearances or implementation.
First round only an initial test
The government argues that judging the programme by its initial response is premature.
The RFP was issued only on 7 July, and developers must prepare feasibility studies, identify technologies, secure feedstock arrangements and establish project economics before applying.
Applications will also be accepted on a rolling basis, with new two-month windows opening after each round.
The first round should therefore be viewed as an initial indication of appetite rather than a verdict on the scheme.
Economics remain key hurdle
Coal gasification projects are capital-intensive and technologically complex, with economics dependent on coal costs and quality, financing, plant utilisation, technology performance and prices for downstream products.
The government has attempted to improve project economics through the capital subsidy, 30-year coal linkages and a 50% rebate in revenue share for coal used for gasification under the commercial mining framework.
But developers will ultimately have to demonstrate that projects can compete economically with alternative feedstocks and imported products.
Focus shifts from ambition to execution
India’s expanding domestic coal resource base provides the strategic foundation for developing gasification as an additional source of demand beyond conventional combustion.
If the new programme delivers its targeted 75 mnt/year, it would consume coal equivalent to around 7% of India’s current annual production while potentially reducing dependence on imported gas, fertiliser and chemical feedstocks.
The policy architecture is increasingly in place. NTPC and TFL’s applications also show that the scheme has attracted initial interest.
The bigger test is now execution — how many projects enter successive rounds, achieve financial closure, begin construction and ultimately produce commercially viable products.
With the 100 mnt/year target due by 2030, India’s coal gasification strategy is moving from policy ambition towards a much more demanding implementation phase.
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