New Delhi: A new white paper on coal gasification has argued that India should treat the fuel route as a buffer against geopolitical shocks hitting oil, LPG and fertiliser supplies, especially amid renewed tensions around the Strait of Hormuz. The report, released against the backdrop of the government’s Rs 8,500-crore incentive framework for coal gasification, says the technology offers a “strategic pathway to domestic energy and industrial resilience” and calls the country’s reliance on imported chemicals a “hidden form of energy dependence.”
The white paper, prepared by New Era Cleantech Solution Pvt Ltd, a coal-to-chemicals company, with analytical inputs from EY Parthenon, was formally released by Union Coal Minister G Kishan Reddy and Maharashtra Chief Minister Devendra Fadnavis recently.
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The white paper says India imports approximately 85 percent to 90 percent of its crude oil requirements and adds that the Strait of Hormuz remains the country’s most important energy chokepoint, with around 30 percent of global seaborne crude and about 90 percent of India’s LPG imports passing through the corridor. It says recent tensions in West Asia have already led to supply disruptions, port delays and LPG price increases of up to Rs 144 per commercial cylinder.
The report also says crude oil and fuel shocks continue to hit the wider economy hard. It notes that India’s crude import bill touched USD 158 billion in FY23, while crude oil import dependence rose from 83.8 percent in FY19 to about 88.2 percent in FY25. The paper says rising oil prices affect inflation, fertilizer subsidy spending, the trade deficit and currency stability.
Beyond crude and gas, the report focuses on what it calls the deeper industrial exposure embedded in chemical feedstocks. It says India’s combined annual import value of energy-derived chemical feedstocks already exceeds USD 30 billion. These include ammonia, urea, mono ethylene glycol (MEG), methanol and ammonium nitrate, all of which feed sectors such as fertilisers, textiles, plastics, mining and pharmaceuticals.
The paper says the 2022 energy crisis showed how quickly these markets can tighten. It notes that methanol prices doubled, ammonia rose by over 300 percent, ammonium nitrate increased by nearly 200 percent, MEG rose by about 95 percent and olefins and petrochemical intermediates rose by around 50 percent. In fertilisers, the report says global urea prices jumped from about USD 350 a tonne to nearly USD 900 a tonne during the crisis, pushing India’s fertilizer subsidy bill from Rs 79,530 crore in FY21 to Rs 2.54 lakh crore in FY23.
A major part of the paper is devoted to dimethyl ether, or DME, which it describes as a possible substitute for LPG. The report says DME can be produced from coal gasification, natural gas reforming, biomass gasification or waste-derived syngas, and that it can be blended, transported and stored using existing LPG infrastructure with limited modification.
It also highlights the size of India’s LPG exposure. The paper says LPG consumption reached 31.3 million tons in FY25, while domestic production stood at 12.8 million tons, forcing imports of 20.7 million tonnes. India’s LPG import bill is estimated at USD 13-15 billion annually, and demand is projected to rise to 43.6 million tonnes by 2030-31.
On that basis, the report argues that even a modest blending programme could make a difference. It says an 8 percent national blending programme could cut LPG imports by about 2.5 million tonnes a year. It also notes that BIS has already notified standards allowing up to 20 percent DME-LPG blending in India, while UNECE approved up to 12 percent DME by mass in LPG for transport and distribution in 2024. China, the paper says, has already demonstrated 20 percent DME-LPG blends for domestic cooking.
The paper gives similar weight to the fertiliser sector, saying urea sits at the heart of India’s food security system. It says 95 percent of domestic urea is produced using gas, most of it imported, and that India imported 58.62 lakh tonnes of urea during April-October 2025, more than double the 24.76 lakh tonnes imported in the same period a year earlier.
The report says coal gasification could reduce this vulnerability by supporting domestic ammonia and urea production. It points to the Talcher fertilizer project in Odisha as the “lighthouse project” for the sector. The plant is designed to produce 2,200 tons per day of ammonia and 3,850 tons per day of urea, and is expected to be completed in late 2027. The paper says it would be the first large-scale venture to prove that Indian high-ash coal can be gasified reliably.
The white paper argues that India has the resource base to scale such projects. It says geological coal reserves exceed 360 billion tonnes and notes that annual coal production has crossed one billion tonnes. It also says coal gasification can support the production of methanol, ammonia, DME and synthetic natural gas, while remaining compatible with carbon capture, utilisation and storage when paired with lower-carbon pathways.
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The report says the government should treat the sector as “geopolitical safeguard” and even “a national industrial strategy”. Among its recommendations are a phased DME blending mandate, a dedicated coal-to-urea investment framework and support for new coal-to-chemicals clusters near mining regions.