Since India’s Independence, for more than 75 years, the resource-rich nation has lacked energy security, which has remained one of its most challenging and persistent economic vulnerabilities. Today, we rank among the top five economies of the world, making massive strides in technology, infrastructure, and space exploration, but our energy security remains dependent on foreign nations.
The ongoing West Asia conflict has highlighted the situation more deeply. What we ignored for years has become one of the most challenging tasks to achieve: Breaking free from energy dependence.
Every day, vast quantities of imported crude oil and natural gas flow into Indian ports. While this keeps the economic engine running, it leaves the country highly exposed to international supply shocks, maritime trade bottlenecks, and volatile pricing. The blockade of the Strait of Hormuz has further highlighted India’s vulnerability.
The Qatar conundrum
Qatar remains India’s largest supplier of liquefied natural gas (LNG), accounting for roughly 40-50% of total LNG imports. Along with supplies from the UAE, much of India’s imported gas passes through the strategically sensitive Strait of Hormuz, making the country vulnerable to geopolitical tensions and supply disruptions.
While India has diversified its imports by sourcing LNG from countries such as the United States, Australia, and African nations, dependence on the Gulf region remains significant.
Unlike crude oil, India does not yet have large-scale strategic natural gas reserves. Most available gas stocks are operational inventories maintained at LNG terminals and within the pipeline network.
The risks of import dependence were highlighted in early 2026, when production disruptions in Qatar forced India to reduce gas supplies to several industries. Since natural gas is essential for fertiliser production, power generation, city gas networks, steel manufacturing, and petrochemicals, any disruption can impact food security, inflation, and industrial output.
In this changing global order, sanction threats, energy independence remains New Delhi’s top most priority.
In a major policy move amid the West Asia war, the Union Cabinet approved a massive financial outlay of Rs 37,500 crore to fund the Scheme for Promotion of Surface Coal and Lignite Gasification Projects on May 13. This initiative aims to pivot away from foreign reliance by tapping into a resource India has in abundance.
Turning Coal into Gas: End of India’s global reliance?
Under this massive schem of Rs 37,500 crore, the government intends to speed up coal and lignite gasification projects in India. The aim is to convert coal into ‘syngas’, a fuel that can be used to make products such as fertilisers, chemicals, methanol, and synthetic natural gas.
India, which currently inports more than 50% of LNG (Liquefied Natural Gas), around 20% of urea, 100% of ammonia and about 80-90% of methanol, as per PIB data.
The initiative aims at reducing dependence on imported fuel and industrial raw materials.
What government intend to do?
India has the fifth-largest coal reserve. The government intends to encourage long-term investment and has extended coal supply agreements for gasification projects to up to 30 years. This gives companies greater confidence to invest in large-scale projects.
Under the Promotion of Surface Coal/Lignite Gasification Projects , the government will provide financial support for new coal and lignite gasification projects. The scheme aims to gasify around 75 million tonnes of coal and lignite.
Companies can receive incentives of up to 20% of their plant and machinery costs. Projects will be selected through a transparent bidding process. Incentives will be released in stages as projects achieve key milestones. A single project can receive up to Rs 5,000 crore in incentives.
But if India has the world’s fifth-largest coal reserve, why did it depend on foreign imports for 75 years?
The Geological challenge: Why India’s coal is difficult to gasify
India has long had a coal reserve, but its reliance on foreign nationals has never changed. Why? Take a look back at your Chemistry textbooks; a simple ‘types of coal’ chapter has all the answers.
Coal is mainly classified in four parts: Peat, Lignite, Bituminous & Anthracite Coal, depending on energy content and purity.
While India has predominantly Bituminous and Lignite, which are lower-grade varieties with lower energy value and higher levels of impurities.
Although coal gasification is a proven technology used in several countries, scaling it up in India has long been a challenge due to the nature of the country’s coal reserves.
The biggest challenge is the high ash content found in Indian coal. Meanwhile, Anthracite coal has low ash content but a limited reserve in India.
This creates significant technical hurdles for coal gasification. A large portion of the coal being processed does not contribute to energy production and instead turns into waste material. The excess ash can damage equipment, block pipelines and reactors, increase maintenance costs, and make the gasification process less efficient.
As a result, coal gasification projects in India require specially designed technologies and engineering solutions capable of handling the unique characteristics of domestic coal.
This is one of the key reasons why previous efforts to expand coal gasification in the country faced difficulties despite the technology being successfully used elsewhere.
Overall, with this Rs 37,500 crore coal gasification initiative, which isn’t a silver bullet or purely “green,” but as a targeted hedge against supply shocks for critical uses, it has strategic merit, providing energy independence with balanced growth and security.
