Coal Gasification Can Raise India's Resource Security Amid Decarbonisation Uncertainties: Report

Why It Matters

Reducing import reliance strengthens India’s raw‑material security and shields steelmakers from global price shocks, while the financial incentives accelerate domestic gasification capacity despite higher emissions.

Key Takeaways

• Coal gasification could replace up to 90% of imported coking coal
• India's Mission Coking Coal targets 140 Mt domestic production by 2030
• Government incentives total $6.5 billion for gasification projects
• Syngas‑based DRI emits 2.5‑2.9 tCO₂/tcs, higher than BF‑BOF
• Domestic coal reserves of 400 bn tonnes back gasification

Pulse Analysis

India’s steel sector is expanding at a rapid 7.4% in 2026 and 9.2% in 2027, making it the world’s fastest‑growing market. Yet nearly 90% of its coking‑coal needs are met by imports, primarily from Australia, exposing producers to price spikes and geopolitical disruptions. The reliance on liquefied natural gas (LNG) compounds the risk, as the country imports over half of its gas supply. This import dependence threatens the industry’s competitiveness and raises concerns about long‑term raw‑material security.

Coal gasification offers a domestic alternative by converting plentiful Indian coal reserves—estimated at 400 billion tonnes—into syngas, a blend of carbon monoxide, hydrogen, and carbon dioxide. Syngas can partially replace coking coal in blast‑furnace operations and serve as a direct substitute for LNG in gas‑based direct‑reduced‑iron (DRI) processes. While the technology could unlock $7‑11 billion in annual import‑substitution value, its emissions profile (2.5‑2.9 tCO₂ per tonne of steel) exceeds that of the traditional BF‑BOF route, highlighting a tension between resource security and decarbonisation goals.

To accelerate adoption, the Indian government has rolled out a suite of incentives, including an $1 billion scheme launched in 2024 and a further $4.5 billion allocation in May 2026, with up to $600 million available per project. These funds support ventures such as Greta Energy’s Maharashtra plant and a Coal India‑Steel Authority joint venture in West Bengal. By fostering domestic gasification capacity, policymakers aim to curb import exposure, stimulate local industry, and navigate the complex trade‑off between economic resilience and climate commitments.