India is betting on coal gasification to reduce import dependence and boost manufacturing, but engineering realities may ultimately determine its success.
By Ankush Kumar
India’s INR 37,500 crore (USD 3.9 billion) coal gasification scheme could reshape the country’s industrial future, but its success may ultimately depend on one overlooked factor: high-ash coal. As New Delhi seeks to reduce imports of methanol, ammonia, and natural gas while strengthening domestic manufacturing, it is betting that coal can become more than just a fuel for power generation.
Instead of burning coal primarily to produce electricity, the government wants to convert it into syngas—a key building block for methanol, ammonia, synthetic natural gas, hydrogen, and other value-added chemicals. The strategy has gained renewed urgency as geopolitical tensions and disruptions in global LNG markets have exposed the risks of import dependence. According to the Ministry of Coal’s recent roadshow on coal and lignite gasification projects, the initiative aims to improve energy security, build domestic value chains, and attract fresh investment.
Yet the biggest challenge behind India’s coal gasification ambitions is not funding or policy support. It is whether proven technologies can be adapted to one of the world’s highest-ash coal resources and made commercially viable.
The strategy is backed by scale. India has nearly 400 billion tonnes of geological coal resources, among the largest in the world, and coal still accounts for roughly 55% of the country’s energy mix and around 74% of electricity generation. Yet one question could determine whether the policy succeeds: Can gasification technology be adapted to India’s high-ash coal?
Turning Coal into Chemicals
Coal gasification converts coal into synthesis gas, or syngas, by reacting it with oxygen and steam under high temperatures and pressure. The resulting mixture of hydrogen and carbon monoxide becomes the feedstock for methanol, ammonia, urea, synthetic natural gas, and a range of industrial chemicals.
For India, the opportunity extends well beyond power generation. The National Coal Gasification Mission estimates that the country imports around 2.5 million tonnes of ammonia and between seven and eight million tonnes of urea every year. Producing these products from domestic coal could reduce foreign exchange outflows while strengthening supply security.
Syngas could also support Direct Reduced Iron (DRI) production and greater use of electric arc furnaces in the steel sector, helping reduce dependence on imported coking coal and furnace oil. Meanwhile, hydrogen produced during gasification can be used in refineries, where it is essential for removing sulfur from crude oil and producing cleaner fuels.
India’s interest in gasification is not new. The Sindri fertilizer plant, situated in the eastern state of Jharkhand, used coal gasification for fertilizer production in the 1960s before shutting down, while more recent pilot projects have attempted to adapt the technology to Indian conditions with mixed results.
Why High-Ash Coal Matters
The biggest challenge lies not in the concept but in the coal itself.
Indian coal typically contains ash levels above 30% and often close to 40%, making it significantly more difficult to gasify than many international grades. High ash increases slag formation, accelerates equipment wear, and lowers process efficiency, forcing developers to redesign technologies originally built for cleaner feedstocks.
The National Coal Gasification Mission recognizes this constraint and calls for dedicated research and development capabilities comparable to those established in China. It also stresses the need to optimize plant configurations while balancing capital and operating costs and addressing impurities in syngas.
Commercial viability remains equally important. Coal-based ammonia plants generally require 30% to 40% higher capital expenditure than natural gas-based facilities, while methanol and ammonia prices are set by international markets. Unless domestic production becomes cost-competitive, imports will remain an attractive alternative.
The Mission also recommends evaluating Carbon Capture, Utilization and Storage (CCUS) technologies, noting that models used in the United States have demonstrated how captured carbon dioxide can support enhanced oil recovery while reducing emissions.
China Offers a Blueprint—But Not an Easy One
China has shown what coal gasification can achieve when technology, policy, and industrial ecosystems evolve together.
According to Coal Hub, the coal market intelligence platform, China is advancing up to 13 large-scale coal-to-gas projects, including a USD 3.7 billion facility in Liaoning expected to begin operations by October 2026. Together, these projects could eventually meet about 12% of the country’s current gas demand, directly substituting imported LNG with domestically produced gas.
Coal Hub argues that China’s approach represents a structural transformation rather than a cyclical market response. Coal is increasingly being used as a feedstock for chemicals, synthetic fuels, and industrial gases instead of serving only as a source of electricity.
However, China’s success reflects decades of investment in engineering expertise, integrated coal-to-chemicals complexes, and continuous research. Its coal quality also differs from India’s, making commercial gasification less technically demanding. For India, the challenge is therefore not inventing gasification but localizing it.
Talcher and the Commercial Test
India’s flagship Talcher Fertilizers project in Odisha illustrates both the promise and the complexity of that effort.
The INR 13,000 crore (approximately USD 1.5 billion) project, executed by Talcher Fertilizers Ltd., is designed to produce 1.27 million tonnes of urea annually through coal gasification. However, information shared in the Lok Sabha by Minister of State for Chemicals and Fertilizers Anupriya Patel shows that the project has slipped more than four years behind schedule. Originally due for completion in September 2023, it is now expected by December 2027 and has achieved just about 71% physical progress.
Talcher is not the country’s only experiment. JSPL previously tested blending imported coal with domestic coal at its Angul facility, while Talcher Fertilizers is using petroleum coke alongside high-ash non-coking coal to improve syngas production. Bharat Heavy Electricals Ltd. (BHEL) also developed a pilot gasification plant in Tiruchirappalli that generated around 6.2 MW of power but encountered difficulties handling high-ash coal. In Pune, Thermax established a coal-to-methanol pilot project with support from the Department of Science and Technology under the aegis of NITI Aayog, while Larsen & Toubro has gained practical experience by engineering and commissioning gasifiers in China.
Together, these projects suggest that India is steadily building technical capability rather than starting from scratch. At the same time, they underline a common reality: commercial deployment demands years of engineering refinement and process optimization.
Some experts have proposed blending domestic coal with imported lower-ash grades to improve gasifier performance, but doing so would weaken the broader objective of reducing import dependence. The more durable solution lies in adapting technology to India’s own resource base.
A Bet on Commercialization
India is no longer asking whether coal gasification works. China and decades of global experience have already answered that question. The real challenge is whether the technology can be adapted and commercialized for one of the world’s highest-ash coal resources.
The government’s latest scheme aims to transform abundant domestic coal into fertilizers, chemicals, and cleaner industrial feedstocks while reducing dependence on imported LNG, methanol, and ammonia. Yet achieving those goals will require far more than financial incentives. It will depend on engineering innovation, sustained research, and the ability to localize technologies for Indian conditions.
Ultimately, India’s USD 3.9 billion coal gasification push is a bet on industrial self-reliance. If engineers can solve the high-ash challenge and make projects commercially viable, coal could evolve from a conventional fuel into the backbone of a competitive chemicals industry. If they cannot, the country’s biggest hurdle will not be a lack of policy support or investment—it will be the engineering realities imposed by the coal itself.