In 2024, India spent nearly US$37 billion importing LPG, LNG, urea, and Diammonium Phosphate (DAP), even though the country holds massive coal reserves that could be used to make these products or viable alternatives. To address this, a new report from the Centre for Domestic Economy Policy Research (C-DEP) and the Centre for WTO Studies (CWS) in New Delhi identifies which coal-derived chemicals should be prioritized. By focusing on these specific chemicals, India can effectively cut down its reliance on foreign imports and build a stronger, more resilient domestic economy.

As the Indian government rolls out its Rs. 37,500 crore scheme to gasify an extra 75 million tonnes of coal and lignite each year, these findings urge a focus on high-value outputs. To meet the national goal of 100 million tonnes by 2030, India must prioritize products offering the strongest economic returns, strategic advantages, and import-substitution potential.

Titled Coal-to-Chemicals Policy in India: A Strategic Framework for Product Prioritisation under the National Coal Gasification Mission, the report evaluates 23 coal-derived products against eight economic, industrial, and strategic criteria. It identifies hydrogen as the top priority, followed by synthetic natural gas (SNG), methanol, ammonia, dimethyl ether (DME), liquefied natural gas (LNG), liquefied petroleum gas (LPG), urea, and diammonium phosphate (DAP).

According to the findings, India spent more than US$27 billion on LPG and LNG imports in 2024, alongside an additional US$9.6 billion on imported urea and DAP. Adopting coal gasification could offset a portion of these import bills by enabling the domestic manufacture of essential fuels, fertilizers, and chemical feedstocks.

“Coal gasification in India is at an early stage. The immediate challenge is to establish which technologies are commercially viable for Indian coal and which products offer the best economic returns. While import dependence, supply security and strategic importance should guide product prioritisation, we must first allow industry to test these technologies and establish their feasibility. The Government has created the necessary policy and financial support. The next step is for industry to demonstrate commercially viable projects, after which a more targeted product prioritisation framework can be developed.” Dr. Anil Kumar Jain (IAS), Chairperson, Petroleum and Natural Gas Regulatory Board (PNGRB), remarked during his address.

“India has the coal resources and a growing domestic market for fuels, fertilisers and industrial chemicals. With ₹37,500 crore committed to coal gasification, the priority must now be to identify where these investments can deliver the greatest economic benefits. Our analysis provides a framework for directing investment towards products that can reduce imports, strengthen domestic supply chains and support India's industrial self-reliance,” said Dr. Jaijit Bhattacharya, President, C-DEP.

The report also looks at lessons from China’s coal-to-chemicals boom. While China successfully scaled up domestic production of fertilisers, methanol, and other chemicals through integrated industrial clusters, moving too fast left the country with underused plants, heavy capital costs, and water shortages.

To get it right, the study urges India to invest in phases and develop shared manufacturing hubs where central gasification plants feed multiple downstream industries. Rather than expanding blindly, India should let the economic and strategic value of the final products guide its investments. Prioritising the right products will help India cut down on energy and fertiliser imports while unlocking new opportunities for local chemical makers.