The second round of the scheme for promotion of surface coal and lignite gasification, which concluded on Tuesday, turned out to be lacklustre with no response coming from the private sector.
State-run NTPC was the only company that participated in the second round, submitting two applications, Coal Ministry said.
The applications envisage production of urea, methanol and dimethyl ether (DME), highlighting the potential of coal gasification in supporting domestic production of critical industrial products and diversifying the utilisation of India’s indigenous resources, the Ministry added.
Atanu Mukherjee, CEO of Dastur Energy, who has been closely involved in the coal gasification policy and technology discussions, said that NTPC’s continued participation is encouraging.
“However, the limited response in the second round highlights the need to complement financial incentives with schemes that help create commercially viable and bankable coal gasification projects that attract wider private-sector investment,” he told businessline.
The first round of the scheme concluded in September 2026 with seven applications coming from NTPC, Adani Enterprises, Gallantt Ispat, Shyam Sel & Power and Talcher Fertilizers for producing synthetic natural gas, urea and direct reduced iron. The applications are currently under review.
Building on the progress achieved under the first two rounds, the Ministry also launched the third round of the scheme with effect from November 10, 2026, providing another opportunity for eligible entities to submit proposals. The last date for submitting applications is January 11, 2027.
The scheme provides a strong foundation, but viability-gap funding alone may not be sufficient. Even commercially sound projects can struggle to secure financing because lenders remain cautious about technology, construction and operating risks, particularly where domestic commercial precedents are limited, Mukherjee emphasised.
“One important step would be to complement existing incentives with a government-supported partial credit guarantee mechanism. By sharing a defined portion of lenders’ risks while ensuring rigorous project appraisal and adequate sponsor participation, such a framework could improve access to debt, lower financing costs and encourage greater private investment,” he suggested.
At the same time, Mukherjee stressed India needs to assimilate proven technologies and adapt them to its high-ash coals and standardise on modular designs that enable faster and more widespread commercial implementation.
Through successive rounds, the Ministry aims to encourage wider industry participation, attract investments and accelerate adoption of coal gasification technologies, contributing towards the national target of achieving 100 million tonnes of coal gasification capacity by 2030.
Published on November 10, 2026
