In a major step towards expanding the use of coal beyond conventional power generation, Union Coal and Mines Minister G Kishan Reddy recently announced that Bharat Heavy Electricals Limited (BHEL) and Coal India Limited (CIL) are jointly investing ₹ 25,000 crore in a coal gasification project in Odisha.
The investment marks far more than an industrial investment. It signals a fundamental shift in India’s approach to coal—from merely burning it to generating electricity to converting it into high-value industrial products such as fertilisers, chemicals, methanol and synthetic fuels.
For Odisha, however, the real opportunity lies beyond the ₹25,000-crore investment itself. The coal gasification project holds the potential to become the nucleus of an extensive ecosystem of Micro, Small and Medium Enterprises (MSMEs). If planned strategically, hundreds of local enterprises can emerge around the project, transforming Odisha from a supplier of raw coal into a producer of value-added industrial products.
Presently, Odisha is home to nearly one-fourth of India’s coal reserves (around 90 billion tonnes), making it the country’s second-largest coal-bearing state after Jharkhand and the largest producer of coal. Its vast deposits in Talcher and Ib Valley Coalfield, spread across Jharsuguda and Sundargarh districts, are critical to India’s energy security, supplying fuel to power plants and industries across the country.
Globally, India has the world’s fifth-largest coal reserves and is the second-largest coal producer, after China.
Coal gasification is fundamentally different from conventional coal mining. It creates synthesis gas (syngas), which serves as a feedstock for manufacturing ammonia, methanol, ammonium nitrate, hydrogen, plastics, resins, solvents and several speciality chemicals. Every stage of this value chain creates demand for MSMEs manufacturing equipment, supplying components, providing engineering services and producing downstream products.
As India moves towards greater value addition through initiatives such as coal gasification, Odisha is uniquely positioned to lead this transition. Instead of remaining merely a mining state, it can leverage its abundant coal resources to build a thriving ecosystem of MSMEs in engineering, chemicals, equipment manufacturing, logistics and industrial services, generating far greater employment and economic value than mining alone.
Why MSMEs can play a significant role
Engineering MSMEs can manufacture pressure vessels, storage tanks, industrial valves, heat exchangers, pipelines, pumps, compressors, electrical panels, instrumentation systems and fabrication structures required by gasification plants. Chemical MSMEs can produce industrial gases, solvents, adhesives, coatings, industrial chemicals and speciality products using gasification outputs. Construction MSMEs can manufacture fly ash bricks, precast concrete products, cement additives and road-building materials from industrial by-products.
The fertiliser value chain alone can generate hundreds of ancillary enterprises. MSMEs can manufacture fertiliser packaging materials, irrigation equipment, agricultural sprayers, storage systems, transport containers and farm-input distribution infrastructure. Similarly, logistics firms, laboratory testing centres, industrial maintenance companies, environmental monitoring agencies, drone-based inspection firms and digital automation start-ups can become integral partners in the emerging industrial ecosystem.
Beyond coal gasification, they can spur hundreds of small enterprises manufacturing mining equipment, industrial machinery, electrical components, safety gear and fabricated steel products. MSMEs can also thrive in maintenance, logistics, drone-based surveys, environmental services, coal beneficiation and fly ash-based products such as bricks, cement and precast materials. Together, these enterprises can create far more jobs, entrepreneurship and value addition than coal extraction alone.
Jharkhand has promoted MSMEs by developing ancillary industries around its coal, steel and power sectors. Industrial estates in Bokaro, Dhanbad and Ramgarh support MSMEs engaged in engineering, fabrication, equipment repair, logistics and industrial services.
Vendor development programmes by Coal India subsidiaries and public sector enterprises have helped local MSMEs integrate into mining supply chains.
Odisha can build on this model by establishing dedicated MSME clusters around Talcher and Ib Valley, linking local enterprises with the proposed coal gasification project, steel plants and thermal power stations. Procurement preferences, common facility centres, technology support and easier access to credit can help create a robust ecosystem of local suppliers, ensuring that coal generates not just revenue but also entrepreneurship and employment.
Coal has long powered India’s industries and homes. It is now time for it to power Odisha’s entrepreneurial future. The true measure of Odisha’s coal wealth will not be the number of tonnes extracted, but the number of enterprises created, jobs generated and value added within the state. By placing MSMEs at the heart of its coal strategy, Odisha can transform a finite natural resource into a lasting engine of inclusive industrial growth.
