The Union Cabinet on Tuesday approved an "exclusive subsidy policy" for urea fertiliser produced through coal-gasification by Talcher Fertilizers Ltd (TFL).

Incorporated in 2015, TFL is a joint venture between GAIL India Ltd, Coal India Ltd, Rashtriya Chemicals and Fertilizers Ltd and Fertilizer Corporation of India Ltd (FCIL).

TFL is reviving the erstwhile Talcher plant of FCIL by setting up a now greenfield urea plant in Odisha with the installed capacity of 12.7 lakh tonne per annum. The estimated project cost of the TFL urea project is Rs 13,277.21 crore.

Briefing repoters about the Cabinet's decisions, Commerce Minister Piyush Goal said the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has given its approval for "a specific subsidy to promote this innovative technology of coal-gasification for the first time in India."

Coal gasification plants are strategically important as coal prices are non-volatile and coal is abundantly available in the country, he said.

"...India has large coal reserves but not adequate gas. This effort to convert coal to gas, and then gas to urea will truly help India become Aatmanirbhar (self-reliant)," Goyal said.

The gasification process adopted in the Talcher unit is a Clean Coal Technology giving negligible sulphur dioxide, nitrogen dioxide, and free particulate emissions as compared to directly coal fired processes, he said.

The Talcher plant is also expected to reduce dependence on natural gas for production of urea leading to reduction in LNG import bill, he added.

Further, the minister said the Talcher project will help improve availability of fertilizer to farmers thereby boosting development of eastern region and will save transport subsidy for supply of urea in eastern part of the country.

It would assist in reducing Urea imports to the tune of 12.7 lakh tonne per annum leading to savings in foreign exchange.

"We are confident that this project will write a new chapter in India's fertiliser security and will also introduce this new technology for the first time in India," he added.