While the scheme is an industrial policy intervention designed to accelerate India’s target of gasifying 100 million tonnes of coal by 2030, at another level, it reflects a much deeper strategic shift. It highlights how policymakers are increasingly viewing excessive dependence on imported LNG, fertilisers, methanol, and chemical feedstocks not merely as a trade imbalance but as a structural national security risk, capable of destabilising inflation, fiscal balances and industrial competitiveness during geopolitical crises.

Can Gasification Be The Next Big Thing 

Industry executives have become even more direct in framing the stakes involved.

Balasaheb Darade, Founder and Managing Director of New Era Cleantech Solutions, which is developing a 5-MMTPA coal gasification project in Chandrapur, argued that “without developing a large domestic coal gasification ecosystem, India cannot build long-term resilience against global energy shocks.” Darade described coal gasification as “one of India’s largest industrial and economic transformation opportunities over the next two decades,” arguing that products currently imported at enormous cost can increasingly be manufactured domestically through syngas conversion.

Consulting firms are now openly framing gasification as a cornerstone of India’s next industrial phase. Anish Mandal, Partner at Deloitte India, noted that India imported nearly 90% of its methanol requirements and around 25% of urea needs in FY22, largely due to high natural gas-linked production costs. He underlined that coal gasification and liquefaction technologies would play a critical role in import substitution across methanol, ammonia, urea, and petrochemical feedstocks while simultaneously encouraging domestic carbon-capture capabilities.

China Experience

The strategic attraction of the sector is already visible in China’s experience. China currently operates nearly 350 million tonnes of coal gasification capacity, more than three times India’s 2030 target, and uses that infrastructure as a buffer against recent LNG shortages and fertiliser disruptions during the West Asia crisis. Indian policymakers increasingly view that model as evidence that coal gasification can function as a geopolitical shock absorber rather than merely an industrial technology.

Execution Challenges

Even so, the execution risks remain enormous.

India’s coal contains ash levels ranging between 35%-45%, far higher than the low-ash coal typically used in global gasification systems. That technical constraint has repeatedly undermined earlier pilot projects and remains one of the sector’s largest engineering bottlenecks. Projects are also extraordinarily capital-intensive, involving long gestation periods, complex environmental clearances and uncertain downstream demand economics.

That is why the Cabinet decision goes beyond financial incentives alone. The government has simultaneously extended coal linkage tenure up to 30 years for gasification projects in order to provide long-term fuel security, while encouraging indigenous technology development led by entities such as Bharat Heavy Electricals Limited, which has been developing fluidised-bed gasification systems better suited for high-ash Indian coal.

NITI Aayog, which has been steering the broader National Coal Gasification Mission, increasingly views the sector as part of a transitional energy-security architecture rather than a contradiction to India’s climate goals. Policymakers argue that coal will remain embedded in India’s energy system for decades, regardless of renewable expansion, making higher value and cleaner coal utilisation economically preferable to direct combustion.

Environment Concerns

Critics warn that the economics may still prove difficult without stronger carbon capture mandates and guaranteed offtake mechanisms. Coal gasification may produce fewer particulate emissions than conventional combustion, but it still generates substantial carbon dioxide emissions unless paired with carbon capture, utilisation, and storage systems.

Yet within the government’s emerging strategic calculus, the larger concern now appears to be resilience. As global trade fragmentation deepens and geopolitical risks become more persistent, New Delhi increasingly appears willing to tolerate higher short-term capital costs in exchange for reduced long-term exposure to imported energy and industrial feedstocks.

Data shows that the country currently imports nearly 89% of its crude oil requirements, more than 50% of LNG demand, roughly 80-90% of methanol consumption, and almost the entirety of its ammonia requirement, while around 20% of urea consumption is still dependent on imports.

India’s import bill for LNG, LPG, methanol, ammonia, urea, coking coal, and chemical feedstocks touched approximately ₹2.77 lakh crore in FY25, according to industry estimates cited by coal gasification developers and analysts.

(The writer is an economics analyst and journalist. Views expressed are personal.)