Why is India pushing for coal gasification? | Explained

The Union Cabinet approved a ₹37,500 crore scheme to promote new surface coal and lignite gasification projects aimed at producing syngas and downstream indu...

What Happened

The Union Cabinet approved a ₹37,500 crore scheme to promote new surface coal and lignite gasification projects aimed at producing syngas and downstream industrial products.
The scheme targets gasification of approximately 75 million tonnes of coal and lignite annually, with a national goal of reaching 100 million tonnes of gasification capacity by 2030.
The programme is designed to mobilise ₹2,50,000–3,00,000 crore of private investment through competitive bidding and milestone-linked incentive disbursements.
India's combined import bill for LNG, urea, ammonium nitrate, ammonia, coking coal, methanol, and DME stood at approximately ₹2.77 lakh crore in FY2025, making import substitution a core driver of the initiative.
The high ash content (30–45%) of Indian coal — significantly above the ~30% threshold at which standard gasification technologies are economically viable — remains the primary technical barrier to rapid scaling.

Static Topic Bridges

Coal Gasification and Syngas Production

Coal gasification is a thermo-chemical process in which coal reacts with controlled amounts of oxygen and steam at high temperatures to produce syngas — a combustible gas mixture primarily composed of carbon monoxide (CO) and hydrogen (H₂). Unlike combustion, which burns coal directly, gasification partially oxidises it. The syngas produced can be converted into a range of downstream products: urea, ammonia, methanol, dimethyl ether (DME), and synthetic natural gas (SNG).

Three main gasifier types exist: moving-bed (fixed-bed), fluidised-bed, and entrained-flow.
Fluidised-bed gasifiers offer uniform thermal gradients, high char recycling, and low capital cost — considered the most suitable technology for high-ash Indian coal.
Bharat Heavy Electricals Limited (BHEL) has indigenously developed fluidised-bed gasification technology to handle Indian coal and produce methanol with 99% purity.
Entrained-flow gasifiers operate at higher temperatures and produce cleaner syngas but require lower-ash feedstock.

Connection to this news: The ₹37,500 crore scheme prioritises technologies — particularly fluidised-bed gasification — that can handle Indian coal's abnormally high ash content, a challenge that standard imported gasification technologies are not designed to address.

India's Energy Import Dependence and Strategic Vulnerability

Energy and feedstock import dependence is a structural vulnerability in India's economy. India imports more than 50% of its LNG requirements, approximately 100% of its ammonia, 80–90% of its methanol, and around 20% of its urea. These are critical inputs for fertiliser production, industrial processes, and clean cooking fuel (methanol stoves). The ongoing volatility in West Asia has underscored the risk of concentrated import sourcing from Gulf suppliers for methanol and ammonia.

India sources methanol primarily from Saudi Arabia, Qatar, Oman, and Bahrain.
India is among the world's largest importers of methanol globally.
The coal gasification programme aims to use India's large domestic coal reserves (India holds the world's fourth-largest coal reserves) as the feedstock base to produce these chemicals domestically.
The scheme operates through competitive bidding with milestone-linked payouts; project viability is further shaped by India's evolving carbon trading framework, with commercial commissioning windows projected between FY2032–FY2034.

Connection to this news: The scheme is explicitly framed as an import-substitution strategy — using domestic coal to produce commodities currently purchased from geopolitically sensitive markets, reducing foreign exchange outgo and supply chain exposure.

Integrated Gasification Combined Cycle (IGCC) and Clean Coal Technology

Beyond chemical feedstock, coal gasification is also the basis for Integrated Gasification Combined Cycle (IGCC) — a cleaner power generation pathway. In IGCC, syngas is burned in a gas turbine, and residual heat is used to generate steam for a steam turbine, resulting in higher efficiency and lower emissions compared to conventional coal combustion. Carbon capture and storage (CCS) can be more economically retrofitted to gasification plants than to conventional pulverised-coal plants because CO₂ is present at higher concentrations in syngas streams.

IGCC achieves thermal efficiencies of 40–50% compared to 33–38% for conventional coal power plants.
Pollutants such as sulphur dioxide (SO₂), nitrogen oxides (NOₓ), and particulate matter are removed before combustion in the gasification pathway, not after, making abatement more cost-effective.
India's carbon market (under the Energy Conservation (Amendment) Act, 2022) will increasingly affect the economics of coal-route projects from the 2030s onward.

Connection to this news: As India pursues coal gasification at scale, IGCC offers a pathway to extract more energy per tonne of coal while meeting tightening environmental norms — particularly relevant given the high-ash, high-moisture nature of Indian coal that reduces efficiency in direct combustion.

Key Facts & Data

Scheme outlay: ₹37,500 crore (Union Cabinet approval, May 2026)
Target gasification capacity: 100 million tonnes of coal per year by FY2030
Current import bill (LNG + urea + ammonia + methanol + coking coal + DME): ~₹2.77 lakh crore (FY2025)
Indian coal ash content: 30–45% (global standard for conventional gasification: below ~30%)
India imports ~100% of its ammonia and ~80–90% of its methanol requirements
Investment mobilisation target: ₹2,50,000–3,00,000 crore via competitive bidding
BHEL's fluidised-bed technology produces methanol with 99% purity from high-ash Indian coal
India holds the world's fourth-largest coal reserves