Ministry of Coal

1. Exploration of Coal and Lignite (CS)

1. Nodal Ministry & Department

• • Ministry: Ministry of Coal.
  • Implementing Agency: Primarily Mineral Exploration and Consultancy Limited (MECL), Central Mine Planning & Design Institute (CMPDI), and Geological Survey of India (GSI).

2. Context

• • Launch: A long-running scheme recently extended from 2021-22 to 2025-26 co-terminus with the 15th Finance Commission cycle.
  • Why: To estimate coal resources available in India, which is essential for preparing Detailed Project Reports (DPRs) and auctioning coal blocks.
  • 2026 Update: The Union Budget 2026-27 provided an additional allocation of ₹755 crore for this scheme, sourced from the National Mineral Exploration Trust (NMET) fund. Additionally, Coking Coal was recently notified as a Critical & Strategic Mineral (Jan 2026) to boost its domestic exploration.

3. Objectives

• • To prove and estimate coal/lignite resources across the country.
  • To prepare Geological Reports (GRs) used for the commercial auctioning of coal blocks.
  • To achieve self-reliance in energy by identifying new domestic coal reserves and reducing import dependency (especially for Coking Coal).

4. Type of Scheme

• • Central Sector Scheme (100% funded by the Central Government).

5. Target Beneficiaries

• • The Power, Steel, and Cement industries (through better coal availability).
  • Successful coal block allocatees (who receive pre-verified geological data).

6. Eligibility Criteria

• • Exploration is conducted by designated Central and State government agencies and accredited private agencies (QCI-NABET accredited).

7. Key Features/Provisions

• • Stage I: Promotional (Regional) Exploration: Conducted in new areas to find the general presence of coal.
  • Stage II: Detailed Exploration: Conducted in non-CIL (Coal India Ltd) blocks to determine the exact quantity and grade.
  • Cost Recovery: The cost of exploration is recovered from the successful bidder of the coal block after the auction and credited back to the government.
  • Focus on Coking Coal: New 2026 guidelines prioritize exploration of Coking Coal to support the domestic Steel industry.

8. Budgetary Allocation & Performance (Updated March 2026)

• • Outlay: Total estimated expenditure for the extension period (2021-2026) is ₹2,980 crore.
  • Performance: Over 1,300 sq. km covered under regional exploration. Domestic coal production reached a historic high of 1,047 MT in FY25, supported by these exploration efforts.

 2. Scheme for Promotion of Coal/Lignite Gasification (CS)

1. Nodal Ministry & Department

• • Ministry: Ministry of Coal.

2. Context

• • Launch: Approved in January 2024 with a massive incentive booster announced in Budget 2026-27.
  • Why: To utilize India’s vast coal reserves in a cleaner manner by converting coal into “Syn-Gas,” which can be used to produce chemicals, fertilizers, and natural gas substitutes.
  • 2026 Update: The Union Budget 2026-27 increased the allocation for this scheme by over 1,100%, providing an unprecedented ₹3,525 crore to fast-track the National Coal Gasification Mission.

3. Objectives

• • To achieve 100 Million Tonnes (MT) of coal gasification by 2030.
  • To reduce the import of Natural Gas, Methanol, and Ammonia (Urea).
  • To promote “Clean Coal” technology to meet India’s net-zero commitments.

4. Type of Scheme

• • Central Sector Scheme.

5. Target Beneficiaries

• • Government PSUs (like Coal India, BHEL, GAIL).
  • Private sector companies and Joint Ventures (JVs).
  • Research institutions and small-scale demonstration projects.

6. Eligibility Criteria

• • Companies must be incorporated in India and not be blacklisted or declared as NPAs.
  • Selection is based on a transparent, two-stage competitive bidding process.

7. Key Features/Provisions

• • Financial Incentive (VGF): The scheme provides financial assistance in three categories:
    • Category I (PSUs): ₹4,050 crore outlay; up to 3 projects with a grant of ₹1,350 cr each.
    • Category II (PSU & Private): ₹3,850 crore outlay; selection via competitive bidding.
    • Category III (Demonstration/Small scale): ₹600 crore for indigenous technology or small-batch plants.
  • Revenue Rebate: A 50% rebate in the revenue share for coal used in gasification is provided in commercial coal block auctions.
  • Natural Gas Substitute: Focus on producing Synthetic Natural Gas (SNG) to blend with city gas distribution.

8. Budgetary Allocation & Performance (Updated March 2026)

• • Financial Outlay: The original ₹8,500 crore package was proposed to be expanded to ₹35,000 crore in 2026 to de-risk high-capital projects.
  • Performance: JVs like CIL-BHEL (in Odisha) and CIL-GAIL (in West Bengal) have already been established and reached the construction phase by early 2026.