New Delhi: The government is preparing to auction coal blocks with strong potential for coal gasification as part of its broader strategy to transform the domestic coal sector and promote cleaner, value-added utilization of the fuel. A senior official confirmed that these coal blocks will soon be offered under the commercial coal mining auction framework, marking a significant step toward achieving India’s ambitious coal gasification targets.
The move gains importance against the backdrop of the government’s plan to gasify 100 million tonnes of coal over the next five years. Coal gasification is being positioned as a key pillar of India’s energy and industrial strategy, enabling the country to convert abundant domestic coal reserves into higher-value products while reducing environmental impact and dependence on imports.
Speaking on the sidelines of a coal gasification roadshow jointly organized by the Ministry of Coal and industry body FICCI, Coal Additional Secretary Rupinder Brar said that preparations are underway to auction coal blocks suitable for gasification projects. “Very soon we would auction the coal blocks that have potential for coal gasification,” she stated, emphasizing the government’s commitment to accelerating progress in this area.
Coal gasification is a process that converts coal into synthetic gas, or syngas, by reacting it with oxygen and steam at high temperatures. Syngas primarily consists of carbon monoxide and hydrogen and serves as a versatile intermediate for producing a wide range of downstream products. These include fertilizers, methanol, synthetic natural gas (SNG), ammonium nitrate, and various chemicals used across industries.
Unlike conventional coal combustion, gasification enables a more efficient and cleaner use of coal by allowing pollutants to be captured at the source. This makes it an attractive technology for countries like India, which rely heavily on coal but are also committed to lowering emissions intensity and transitioning to more sustainable industrial processes.
Officials said the coal blocks identified for auction would be offered through the commercial coal mining auction route, allowing both public sector undertakings and private companies to participate. By specifically targeting blocks with gasification potential, the government aims to attract investors who are willing to deploy advanced technologies and establish integrated coal-to-chemicals or coal-to-gas facilities.
To further incentivize such investments, the government has already rolled out a substantial Rs 8,500 crore financial incentive scheme to promote coal and lignite gasification projects. The scheme is designed to support projects undertaken by central public sector enterprises as well as private players, encouraging wider participation and faster capacity creation.
Under the incentive scheme, around Rs 6,000 crore has already been allocated, while the remaining Rs 2,500 crore will soon be made available through a fresh request for proposal (RFP). Brar said the government is in the process of finalizing the RFP, which will invite applications from eligible entities seeking financial support for gasification projects.
The incentive scheme is structured into three categories, catering to different types of coal gasification initiatives. These include coal-to-synthetic natural gas (SNG), coal-to-chemicals, and coal-to-fertilizers projects. Several applicants have already received Letters of Award (LOAs), including joint ventures involved in coal-to-SNG and coal-to-ammonium nitrate ventures.
According to officials, the scheme aims not only to encourage technological adoption but also to build a domestic ecosystem for coal-derived products. India currently imports a significant portion of its requirements for fertilizers, methanol, and specialty chemicals. By producing these products domestically through coal gasification, the government hopes to enhance self-reliance, stabilize supply chains, and reduce foreign exchange outflows.
Coal gasification also aligns with the government’s broader energy transition goals. While renewable energy continues to expand rapidly, coal remains a critical component of India’s energy mix. Gasification offers a pathway to utilize coal in a more sustainable manner, balancing energy security with environmental considerations.
Industry participants attending the roadshow highlighted that policy clarity, assured coal supply, and financial incentives are crucial for the success of gasification projects, which typically involve high capital costs and long gestation periods. The proposed auction of coal blocks specifically earmarked for gasification is expected to address one of the key challenges faced by developers—access to suitable coal resources.
Experts believe that identifying and auctioning coal blocks with favorable characteristics, such as appropriate ash content and geological conditions, will significantly improve project viability. Coupled with financial incentives, this could help accelerate the development of large-scale gasification plants across the country.
The government has also been engaging with stakeholders, including industry associations, technology providers, and financial institutions, to build consensus around the proposed framework. Officials emphasized that collaboration between the public and private sectors will be essential to achieve the target of gasifying 100 million tonnes of coal within the planned timeframe.
In recent years, India has taken several steps to reform the coal sector, including opening it up to commercial mining, simplifying regulatory procedures, and encouraging private investment. The focus on gasification represents the next phase of these reforms, shifting attention from raw coal production to value-added and environmentally responsible utilization.
As the auction process moves closer to launch, market participants are closely watching the details, including the number of blocks on offer, eligibility criteria, and technical requirements. The success of these auctions could set the tone for future investments in coal gasification and related downstream industries.
Overall, the planned auction of coal blocks with gasification potential, supported by a robust incentive framework, underscores the government’s intent to modernize the coal sector. By promoting cleaner technologies, reducing import dependence, and unlocking new industrial opportunities, coal gasification is expected to play a pivotal role in India’s energy and manufacturing landscape over the coming decade.