Low participation in successive bidding rounds of incentive schemes often points to structural constraints. Analyse with reference to the coal gasification scheme.

The Union Cabinet's ₹37,500 crore Scheme for Promotion of Surface Coal/Lignite Gasification Projects is meant to turn domestic coal into urea, methanol and DME [1]. Round 2 closed with only two applications, both from NTPC, a central PSU [1]. That points to structural barriers, not a shortage of money.

What the thin response signals

• Risk stays with the state: government money is going to a government company. Private capital, which an incentive scheme exists to attract, has stayed out [1].
• Money is not the binding constraint: the predecessor ₹8,500 crore scheme (2024) [2] recorded almost no spending for most of 2025-26, against a revised estimate of ₹285 crore [3]. The outlay has still grown more than four times.

Structural constraints, part by part

• Market/offtake: urea is price-controlled. The Talcher coal-to-urea plant needed an exclusive CCEA subsidy policy before it could go ahead [4]. A capital subsidy does not answer the question "who buys my urea, and at what price?"
• Technological: Indian coal has high ash, while most commercial gasifiers are designed for low-ash coal. The Standing Committee on Coal, Mines and Steel urged support for indigenous high-ash technology and trials on Indian coal [3].
• Financial: these plants are capital-heavy. Talcher alone was estimated at ₹13,277.21 crore [4]. Incentives are paid at milestones such as financial closure, so nothing is released if a project stalls. This is why the committee asked for quarterly checks and independent certification of financial closure [3].
• Timeline: Round 3 closes on 11 January 2027 [1]. That leaves about three years to meet the 100 MT by 2030 target [2], which is too short if every plant has to solve the technology problem on its own.
• Environmental: without CCUS, gasification stays carbon-intensive. That raises the risk of stranded assets under India's net-zero goal for 2070.

Price risk + Technology risk + Capital intensity
                    ↓
        Financial closure not reached
                    ↓
   Unspent incentives → few bids → PSU fills gap

Fig: How structural risks turn into low participation

Low participation therefore reflects risks that a capital subsidy alone cannot absorb. Before Round 3 closes, the government could:

• issue a uniform pricing rule for urea made from coal gas;
• fund pilot trials of high-ash gasifiers;
• adopt the committee's milestone framework [3];
• publish why private firms stayed away.

These steps would lower the risk of entering the sector. With them, gasification can strengthen energy security and import substitution in line with SDG 7 and SDG 9.