In thermal power plants, significant improvements in overall efficiencies can be achieved by reducing the leakage flows in compressor and turbine sections. One way to minimize these leakages is by the use of thermally sprayed abradable sealing coatings. This paper discusses the development of abradable coating for gas turbine shroud segments for service temperatures up to 750 ºC. The abradable coating is developed using plasma coating technique. Effects of coating properties on changing the coating parameters are also discussed. Porosity, bond strength, micro hardness, erosion and abradability tests were performed over the plasma coated samples. Porosity, bond strength, micro hardness and erosion tests results were coming within the bracket suggested by the previous researchers; however abradability tests were not upto the mark. An in house abradability test rig was developed and abradable testing at room temperature was performed using this rig. The results obtained with the abradable test rig were not upto the mark and more testing and analysis is currently being performed to achieve more satisfactory results with the test rig.