Coal gasification push to cut imports

New Delhi: Hydrogen, synthetic natural gas (SNG), methanol and ammonia should be prioritised for production from coal to reduce India's dependence on imported fuels, fertilisers and industrial chemicals, according to a new study.The study by Centre for Domestic Economy Policy Research (C-DEP) and the Centre for WTO Studies (CWS) ranks 23 coal-derived products across eight economic, industrial and strategic parameters to guide investments under the government's Rs 37,500-crore scheme for promoting surface coal and lignite gasification projects.Also Read: Global oil market to return to surplus in Q4 2026, larger supply build expected in 2027: IEAHydrogen emerged as the highest-priority product, followed by SNG, methanol, ammonia, dimethyl ether (DME), LNG, LPG, urea and diammonium phosphate (DAP), the study said.The recommendations come as India seeks to expand coal gasification capacity to reduce its reliance on imported energy and fertiliser products.Also Read: India’s fuel demand to keep climbing until 2034 despite EV boomThe government scheme aims to facilitate the gasification of an additional 75 million tonne of coal and lignite annually, while the country's target is to achieve 100 million tonne of coal gasification capacity by 2030.India imported nearly USD 37 billion worth of LPG, LNG, urea and DAP in 2024, underscoring the potential for domestic coal-based production to substitute imports. LPG and LNG imports alone exceeded USD 27 billion, while urea and DAP imports accounted for another USD 9.6 billion, the report said.The study, titled "Coal-to-Chemicals Policy in India: A Strategic Framework for Product Prioritisation under the National Coal Gasification Mission", argues that investments should be directed towards products offering the greatest potential for import substitution, economic returns and strategic supply security.Addressing the report's release, Petroleum and Natural Gas Regulatory Board (PNGRB) Chairperson Anil Kumar Jain said coal gasification in India was still at an early stage and that the commercial viability of technologies suited to Indian coal needed to be established, according to a statement issued by the organisers."While import dependence, supply security and strategic importance should guide product prioritisation, we must first allow industry to test these technologies and establish their feasibility. The government has created the necessary policy and financial support. The next step is for industry to demonstrate commercially viable projects, after which a more targeted product prioritisation framework can be developed," he said.C-DEP President Jaijit Bhattacharya said the government's Rs 37,500-crore commitment made it important to identify products that could deliver the greatest economic benefits."Our analysis provides a framework for directing investment towards products that can reduce imports, strengthen domestic supply chains and support India's industrial self-reliance," he said.The report also draws lessons from China's coal-to-chemicals industry, which expanded domestic production of fertilisers, methanol and downstream chemicals through integrated industrial clusters.However, China's experience also highlights the risks of rapid capacity expansion, including underutilised plants, high capital costs and water constraints, the study said.It recommends that India adopt a phased investment approach and develop integrated manufacturing clusters where common coal gasification facilities can supply multiple downstream chemical industries.The study said a product-focused strategy could help India leverage its substantial coal reserves to reduce import dependence in energy and fertilisers while developing domestic chemical manufacturing capabilities.