Hydrogen, synthetic natural gas (SNG), methanol and ammonia should be top priorities for India’s coal gasification programme, according to a new study that ranked 23 coal-derived products by economic and strategic importance.
The report, released by the Centre for Domestic Economy Policy Research (C-DEP) in collaboration with the Centre for WTO Studies (CWS), said investments under the government’s ₹37,500-crore coal gasification scheme should focus on products offering the greatest potential to reduce import dependence and strengthen domestic supply chains.
Hydrogen emerged as the highest-priority product, followed by SNG, methanol, ammonia, dimethyl ether (DME), liquefied natural gas (LNG), liquefied petroleum gas (LPG), urea and diammonium phosphate (DAP), the report said.
The prioritisation comes against the backdrop of India’s substantial import dependence. The country imported nearly $37 billion worth of LPG, LNG, urea and DAP in 2024. LPG and LNG imports alone accounted for more than $27 billion, while urea and DAP imports amounted to another $9.6 billion.
Coal gasification could help meet part of this demand by producing fuels, fertilisers and chemical feedstocks domestically, according to the report.
The government’s ₹37,500-crore scheme for the promotion of surface coal and lignite gasification projects aims to facilitate the gasification of an additional 75 million tonnes of coal and lignite annually. India has set a national coal gasification target of 100 million tonnes by 2030.
However, the report cautioned that commercial viability and technological feasibility would be critical to determining the success of the programme.
“Coal gasification in India is at an early stage. The immediate challenge is to establish which technologies are commercially viable for Indian coal and which products offer the best economic returns,” said Anil Kumar Jain, chairperson of the Petroleum and Natural Gas Regulatory Board (PNGRB).
While import dependence, supply security and strategic importance should guide product prioritisation, industry must first be allowed to test these technologies and establish their feasibility, he said.
The report also drew lessons from China’s experience in developing its coal-to-chemicals industry. China expanded domestic production of fertilisers, methanol and downstream chemicals through integrated industrial clusters. However, rapid capacity expansion also resulted in underutilised plants, high capital costs and water constraints.
To avoid similar challenges, the study recommended phased investments and integrated manufacturing clusters where common gasification facilities could serve multiple downstream chemical industries.
The report, titled Coal-to-Chemicals Policy in India: A Strategic Framework for Product Prioritisation under the National Coal Gasification Mission, said investments should be guided by the economic and strategic value of the products manufactured.
C-DEP president Jaijit Bhattacharya said the priority should now be to identify areas where the government’s financial commitment could deliver the greatest economic benefits.
