India has approved a 375bn rupee ($3.9bn) incentive package to accelerate coal gasification projects, aimed at reducing reliance on imported fuels and boosting value addition from domestic coal, information and broadcasting minister Ashwini Vaishnaw said.

The decision is intended to promote the conversion of coal into synthesis gas (syngas), supporting greater downstream integration in the coal value chain. Syngas can substitute for natural gas and naphtha in the chemicals and petrochemicals sectors, helping to curb import dependence at a time when the US-Iran war has disrupted key supplies from the Middle East, Vaishnaw said on Wednesday.

The government is targeting the gasification of around 75mn t/yr of coal, to which end it could mobilise investments of up to $37bn. Financial support of up to 20pc of plant and machinery costs will be provided under the scheme as an initial incentive.

India's coal ministry in April signed four agreements for commercial coal blocks with provisions for underground coal gasification, taking the total number of production and development agreements to 138, with combined peak-rated capacity of 331.54mn t/yr.