SF Prep Notes

Cabinet approves ₹37,500-crore scheme to promote surface coal and lignite gasification

On 13 May 2026 the Union Cabinet approved a ₹37,500-crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects, aiming to gasify about 75 million tonnes of coal/lignite and attract ₹2.5–3 lakh crore of investment.

Summary

The Union Cabinet on 13 May 2026 approved a Scheme for Promotion of Surface Coal/Lignite Gasification Projects with an outlay of ₹37,500 crore, targeting gasification of about 75 million tonnes of coal/lignite to make syngas and downstream products. The incentive is up to 20% of plant and machinery cost, chosen through competitive bidding and paid in four instalments, capped at ₹5,000 crore per project, ₹9,000 crore per product (except SNG and urea) and ₹12,000 crore per entity group. It is expected to bring ₹2.5–3.0 lakh crore of investment and about 50,000 jobs across 25 projects, and coal linkage tenure for syngas projects has been extended to 30 years. The scheme advances the national target of gasifying 100 MT of coal by 2030 and builds on the National Coal Gasification Mission (2021) and a ₹8,500-crore scheme of January 2024.

Key facts

Approved
13 May 2026, Union Cabinet
Outlay
₹37,500 crore; ~75 MT coal/lignite
Incentive
Up to 20% of plant & machinery; caps ₹5,000 cr/project, ₹9,000 cr/product, ₹12,000 cr/group
Impact
₹2.5–3.0 lakh crore investment; ~50,000 jobs; 25 projects
Linkage
Coal linkage tenure up to 30 years for syngas
Background
100 MT by 2030 target; National Coal Gasification Mission (2021); ₹8,500 cr scheme (Jan 2024)

Practice MCQs 3 questions

Q1 Advanced

What is the financial outlay of the Scheme for Promotion of Surface Coal/Lignite Gasification Projects approved by the Cabinet in May 2026?

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Correct answer: B — ₹37,500 crore

The scheme has an outlay of ₹37,500 crore; ₹8,500 crore was the earlier scheme approved in January 2024.

Q2 Advanced

Under the 2026 coal/lignite gasification scheme, the financial incentive for any single project is capped at:

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Correct answer: A — ₹5,000 crore

The cap is ₹5,000 crore per project, ₹9,000 crore per product (except SNG and urea) and ₹12,000 crore per entity group.

Q3 Advanced

Consider the following statements about India's coal gasification push: 1. India has a national target of gasifying 100 million tonnes of coal by 2030. 2. Under the 2026 scheme, the incentive is capped at 20% of the cost of plant and machinery. Which of the statements given above is/are correct?

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Correct answer: C — Both 1 and 2

Both are correct. The scheme advances the 100 MT-by-2030 target (building on the National Coal Gasification Mission, 2021) and offers up to 20% of plant and machinery cost.

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