Reliance’s ₹2.73 Lakh Crore Coal Plan: Can Underground Gasification Unlock Andhra’s Deep Reserves?

Reliance Industries has proposed a ₹2.73 lakh crore investment over 30 years to develop what could become India’s first integrated Underground Coal Gasification (UCG) complex in Andhra Pradesh’s Eluru district. But while the headline figure is enormous, the project is still far from becoming a full-scale plant. Its immediate test is a much smaller exploration and pilot programme that will determine whether the ambitious plan is technically and commercially viable.

The proposed complex will focus on the Chintalapudi and Recherla coal blocks, which Reliance secured through the Centre’s commercial coal auction process. In April 2026, the Ministry of Coal signed development agreements with Reliance for the two blocks as part of the first-ever tranche of commercial coal mines carrying embedded UCG provisions. Axis Energy Ventures India secured two other blocks under the same initiative.

UCG works differently from conventional mining. Instead of extracting coal, it converts coal underground into synthesis gas, or syngas, which can potentially be used to produce chemicals, methanol, fertilisers, hydrogen, synthetic fuels and other industrial products. The attraction is particularly strong for coal that may be too deep or uneconomic to extract conventionally.

For Reliance, this is therefore more than a mining project. The company could potentially turn domestic coal into higher-value industrial feedstocks rather than simply selling mined coal.

However, the ₹2.73 lakh crore is a long-term proposal, not an immediate investment commitment. Reliance plans up to ₹3,000 crore for exploration and pilot work from Q3 2026 to Q4 2027. If the pilot succeeds, around ₹1.20 lakh crore is proposed for development between 2028 and 2030, followed by ₹1.50 lakh crore for production from 2030 onward.

The pilot is crucial because UCG has been demonstrated technically, but its economics and reliability at a massive commercial scale remain the biggest questions. India itself is still building domestic experience with the technology.

There are environmental trade-offs too. UCG could reduce surface excavation, overburden and some mining-related pollution, but it introduces risks including groundwater contamination, land subsidence, underground fires and gas leakage. It is therefore not automatically cleaner or better than conventional mining.

Nor is UCG necessarily the best option for every tonne of coal. If coal can be mined safely and economically, conventional mining may remain more predictable. UCG becomes attractive when coal is too deep, difficult or costly to extract.

The project could eventually reduce India's dependence on imported energy and industrial feedstocks, but its actual impact cannot yet be quantified because Reliance has not disclosed final production capacity or how much imported coal, gas or chemicals it could displace.

For now, the ₹2.73 lakh crore figure is best viewed as an ambitious destination, not a project already under construction. The real test begins with ₹3,000 crore: whether India's deep coal can actually be converted into competitive industrial energy without creating an environmental or economic problem underground.