Coal gasification could help India avoid ₹1.96 trillion imports: A&M | Economy & Policy News

India can avoid annual imports of industrial products worth ₹1.96 trillion by developing a domestic coal gasification ecosystem that can convert raw coal into value-added products, including natural gas, urea, ammonia, methanol and acetic acid, Alvarez & Marsal said in a report released on Thursday.

 

The accounting and consultancy firm said India’s imports of gasification-relevant products in the last financial year, including ₹1.18 trillion of natural gas, ₹46,000 crore of urea and ₹9,600 crore of ammonia and methanol, among others, resulted in significant foreign exchange outflows.

 

“Domestic production through coal gasification could partially substitute these imports, reduce exposure to global price volatility, and strengthen foreign exchange resilience, subject to competitive production costs and imported input requirements,” the report, released at the Gasification India 2026 event, said.

  

The report said coal gasification could create industrial opportunities extending well beyond coal mining.

 

Integrated projects require gasification equipment, air-separation units, syngas-cleaning systems, pipelines and utilities that can be shared across gasification players, as well as downstream chemical manufacturing facilities.

 

The Ministry of Coal has projected investment of ₹2.5-3 trillion and 50,000 direct and indirect jobs across around 25 projects under its gasification development ambitions.

 

These investments could support new industrial clusters, strengthen domestic engineering capabilities and generate additional economic activity in coal-bearing regions, the report said.

 

India holds the world’s fifth-largest coal resource base, with 400 billion tonnes (BT) of geological coal resources.

 

At least 175 BT, or around 44 per cent, lie at depths exceeding 300 metres, with a portion of these resources potentially difficult or uneconomic to extract through conventional mining.

 

“Underground Coal Gasification (UCG) offers a potential pathway to unlock value from suitable deep-seated and otherwise uneconomic coal deposits by converting coal into syngas in situ, without physically extracting it to the surface,” the report said.

 

Subject to geological suitability, techno-economic feasibility and environmental safeguards, UCG could expand the economically utilisable portion of India’s domestic coal resources and support long-term gasification ambitions, it added.

 

The report said coal gasification can raise the gross value realised from each tonne of coal by converting it into industrial products.

 

Based on indicative assumptions, the value of products produced through gasification could range from about five times to 20 times the value of selling coal as-is.

 

However, expanding India’s coal gasification ecosystem would require dedicated policy support to accelerate ongoing projects, the report said.

 

It called for single-window clearances, time-bound approvals for land, environmental clearances and water access, along with viability-gap or capital support for first-of-a-kind projects.

 

The sector also needs product offtake support, including long-term commitments or assured pricing from public-sector fertiliser, refining and steel buyers, to reduce investment risks and improve project bankability.

 

The report also called for indigenous technology development, including funding for research and development, pilot plants and demonstration units, to adapt gasifiers to high-ash Indian coal and reduce reliance on foreign technology licensors.