India has taken a firm step in reducing its dependence on foreign imports by adopting a new gasification strategy. The current plan involves seven new urea plants, a mix of both green-field and brown-field projects.
The New Investment Policy (NIP) for urea expired in December 2025. Currently, the government is planning on the expansion of current urea capacity in India. This project also aims in reducing dependence on Liquefied Natural Gas (LNG) imports.
The reports suggest the current geopolitical events have led to the urgency to shift. Namely, the Russia-Ukraine war (2022) and the present West Asia conflict has led has significantly exposed India’s vulnerability to fertiliser feedstock.
Since 95 per cent of India’s urea production depends on natural gas, and most of it is imported as LNG. This led to India’s decision to move to a domestic alternative. The reports also confirm that the coal-based urea could be USD 50-75 per ton cheaper compared to the urea in imported LNG.
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Through a chemical process, the coal is broken down to basic molecules. Instead of burning the coal, the process converts it into a clean burning fuel gas called syngas. This can be then used for producing chemical fertilisers, electricity or liquid fuels. The production of urea within the country helps in reducing the high import bills.
India heavily relies on foreign supply chains for important chemical and energy imports. Through this project of coal gasification, there will be a huge reduction of 2.77 lakh crore in annual import bills. Instead of being vulnerable to price hikes in the global market, the country can develop their own urea production plants.
This will shift the chemical sector into a competitive market. Rather than just basic fuel consumption, coal becomes a multi-purpose launchpad for various other sectors. As the syngas-derived methanol is an important component in pharmaceutical ingredients.
This shift solves India’s fertilisation concern as it opens the way for using its natural resources. This project will aim in using local Indian coal, meaning India can reduce their dependence on foreign fuel. The local coal is much cheaper than imported gas, the production cost for fertilisers will drop to USD 50 to 70 per ton.
This initial setup of the gasification project is expected to generate 50,000 direct and indirect jobs. This large scale chemical production will also stimulate logistics networks, maintenance workshops, water treatment facilities and manufacturing clusters as well.
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