India’s flagship Rs 37,500-crore coal gasification incentive scheme has failed to attract a single bid by the deadline, underscoring how the government’s push to cut imports of LNG, urea and methanol is running into weak private-sector appetite and project-economics concerns.
India coal gasification scheme gets no bids
The absence of applications is a setback for New Delhi’s strategy to turn domestic coal and lignite into syngas for fuels and chemicals, a move meant to improve energy security and reduce exposure to global price swings and supply disruptions. It also raises questions about whether India can scale gasification quickly enough to meaningfully dent its import bill, which the ministry said was about Rs 2.77 lakh crore in FY25 for products that gasification could partly replace.
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The coal ministry said the online application process was still under way and that several industries had expressed interest, while noting that project preparation takes time given the scale of funding involved. It also said rounds are planned every two months, suggesting the government is trying to keep the programme alive after an underwhelming first response.
The scheme is one of New Delhi’s most aggressive attempts to support cleaner coal use without abandoning coal altogether. The cabinet approved the programme to gasify 75 million tonnes of coal and lignite, building on a smaller Rs 8,500-crore plan cleared in January 2024, under which eight projects worth Rs 6,233 crore are already being implemented.
For investors, the lack of bids signals that the policy headline is ahead of the commercial reality. Gasification projects are capital-intensive, technologically complex and dependent on long-term offtake economics, making them harder to finance than conventional coal mining or power generation. That could slow spending across coal equipment, industrial gas and chemicals supply chains, even as coal prices remain elevated and global energy markets stay volatile.
The miss also lands against a broader backdrop of mixed signals in the coal sector: companies are still monetizing assets, but long-dated demand assumptions remain under pressure from decarbonization, regulation and capital discipline. The next test is whether the ministry can convert expressions of interest into actual projects in the coming bid rounds, or whether the scheme needs stronger incentives to get private and public players off the sidelines.
| Entity | Gains | Losses |
|---|---|---|
| Indian government | ▲Policy cover on import substitution | ▼Credibility on execution |
| Coal and lignite producers | ▲Potential new domestic demand | ▼Delay in project uptake |
| Chemical and fertilizer importers | ▲No immediate disruption | ▼Continued import dependence |
| Private project developers | ▲More time to assess economics | ▼Missed incentive opportunity |
