Industry Odisha Bureau, Oct 19: India has lined up ₹46,000 crore to turn domestic coal into gas and chemicals. Jindal Steel’s experience shows the promise. The harder test is making plants pay without permanent subsidies.
India is sitting on an estimated 400 billion tonnes of coal. It also faces a crippling ₹2.7 trillion import bill for energy and chemicals each year. New Delhi is now racing to turn that dirty rock into cheap gas and chemicals.
In 2024, ₹8,500 crore in incentives targeted 25 million tonnes per annum (MTPA) of capacity. In May, a national Coal Gasification Mission added ₹37,500 crore. The combined ₹46,000 crore aims to lift capacity towards 100 MTPA by 2030. Former coal secretary Amrit Lal Meena said seven projects are approved and seven await evaluation.
A natural gas squeeze in 2006–07 pushed Jindal Steel towards South African gasification technology. Its Angul plant in Odisha, contracted in 2010, began running in 2014. Coal travels by conveyor from a captive mine and is washed to cut ash. It then reacts with steam and oxygen to yield synthesis gas, or syngas. The syngas strips oxygen from iron ore to make direct reduced iron (DRI). By-products include tar, ammonia, sulphur and naphtha. Jindal is building another 2-million-tonne DRI line, with more gasification alongside.
Managing director V.R. Sharma said imported gas costs $12–16 per million British thermal units (MMBtu). Jindal’s syngas costs $7–8, he said. Those are company figures, and gas quality and capital costs complicate direct comparison.
India imports over 80% of its crude oil and half its natural gas. It also leans on imports for ammonia and methanol, and some urea. West Asian turmoil has exposed that reliance to supply shocks and price spikes. Gasification cannot replace the whole import bill, but could trim a share.
Coal supply was once the constraint, as power plants get first legal claim. Commercial block auctions since 2020 have eased that. Output rose from 639 million tonnes in 2015–16 to about 1,040 million in 2025–26. Captive and commercial mines supplied 210 million tonnes of that. Meena said gasification needs only about 50 MTPA, against power’s 800 MTPA.
Reported investment plans include Reliance at ₹2,73,000 crore and Adani at ₹70,000 crore. Coal India and BHEL plan ₹25,016 crore in Odisha. New Era Cleantech’s Maharashtra complex, costing over ₹20,000 crore, targets commissioning by 2030. Most remain plans rather than working plants.
Industry specialists peg capital costs at about $500 million per MTPA of capacity. At current prices, gasifying coal does not pay without viability gap funding, a state top-up. Projects also get infrastructure status, and gasification coal a 50% revenue-share rebate. Promoters are seeking purchase mandates, which could pass costs to buyers.
China, with over 250 MTPA, makes 70% of its methanol and 90% of ammonia. Crisil Intelligence’s Sehul Bhat warned that high-ash Indian coal will hurt efficiency.
Gasification emits less than burning coal, but still releases greenhouse gases. Syngas is 58% hydrogen, yet coal-based hydrogen is low-carbon only with effective carbon capture. That adds cost, and India’s 2070 net-zero goal limits coal’s horizon.
The test is whether plants can compete once subsidies fade. Past gasification pushes faded when oil prices eased.
