The Case for Building India’s Coal Chemistry Capability

UPSC Syllabus: Gs Paper 3- Infrastructure

Introduction

India successfully managed the 2026 Strait of Hormuz energy disruption through refinery flexibility, diversified crude sourcing and strong indigenous technical capability. However, the crisis also exposed India’s continued dependence on imported LPG. The experience showed that lasting energy security requires reducing import dependence through indigenous science, technology and domestic resources. Building a strong coal chemistry ecosystem offers an important opportunity to strengthen India’s long-term energy resilience.

India’s Response to the Strait of Hormuz Crisis

1. Diversified crude sourcing: India nearly tripled its crude supplier base over the last two decades. This enabled refineries to quickly switch to crude supplies from the Americas, Atlantic Basin, West Africa, Russia and West Asia after the Strait of Hormuz disruption.
2. Indigenous refinery capability: Continuous investment in research, metallurgy, process innovation and workforce training enabled refineries to process crude with different density, sulphur and viscosity levels. This reduced dependence on any single crude source and strengthened operational flexibility.
3. Rapid operational response: Within weeks of the disruption, non-Hormuz crude sourcing increased from 55% to 70% of India’s total crude intake. Public and private refineries adjusted operating conditions, modified fractionation patterns and processed different crude grades while maintaining product quality and safety.
4. Institutional knowledge and engineering strength: Years of investment in process understanding, operator training and technical expertise enabled refinery systems to absorb sudden supply disruptions. Engineers managed complex industrial processes instead of treating refineries as fixed machines.
5. Managing the LPG supply disruption: Under the LPG Control Order, domestic LPG production increased from 35 Thousand Metric Tonnes (TMT) per day to 54 TMT per day within five days by optimising fractionation and cracking units. This engineering capability helped manage the immediate supply shortage, but it did not reduce India’s long-term dependence on imported LPG.

From Refinery Flexibility to Coal Chemistry

1. Refinery flexibility has structural limits: Refinery flexibility solved the immediate problem of processing crude from different suppliers. However, it could not solve India’s deeper dependence on imported LPG, which remains concentrated among a few producers in the Gulf and Atlantic Basin.
2. Need for a domestic fuel alternative: Long-term energy security requires producing a domestic fuel that can replace imported LPG. Reducing dependence on imported molecules is more durable than simply improving the processing of imported fuels.
3. DME as a practical substitute: Dimethyl Ether (DME) is a clean-burning fuel that is chemically similar to LPG. It can be blended directly with LPG and used through the existing cylinders and pipeline network without creating new distribution infrastructure.
4. Coal gasification strengthens energy security: DME can be produced through coal gasification, which converts coal into syngas and then into DME. Since India possesses some of the world’s largest coal reserves, it has a strong domestic resource base for producing this alternative fuel.
5. Economic and strategic gains: The Bureau of Indian Standards has approved blending up to 20% DME with LPG. According to an industry assessment, this blend can replace about 6.3 million tonnes of LPG imports annually and save nearly ₹34,000 crore in foreign exchange every year, making it a significant step towards long-term energy security.

Government Initiatives

1. Indigenous technology development: Scientists at CSIR’s National Chemical Laboratory (NCL) developed an indigenous technology to convert methanol into Dimethyl Ether (DME). This created a domestic technological base for producing an alternative to LPG.
2. Scaling up innovation: During the crisis, the Centre for High Technology under the Ministry of Petroleum and Natural Gas approved the scaling up of this indigenous pilot technology. This showed how earlier investments in science can become strategic assets during national emergencies.
3. Innovation ecosystem: Strong coordination among research laboratories, government institutions and industry helps convert scientific knowledge into practical technologies. This approach strengthens national resilience and supports long-term technological self-reliance.
4. Policy support for coal gasification: The Union Cabinet approved a ₹37,500 crore scheme to promote surface coal and lignite gasification. The scheme aims to achieve 100 million tonnes of coal gasification annually by 2030 and cites the West Asia crisis as one of its key reasons.
5. Long-term investment incentives: The scheme provides financial support of up to 20% of plant and machinery costs and extends coal linkage tenure to 30 years. These measures provide greater certainty for investment in capital-intensive industries.

Opportunities and Implementation Challenges

1. Abundant domestic coal resources: India possesses some of the world’s largest coal reserves. This provides a strong resource base for expanding coal-based chemical production and reducing fuel imports.
2. Strategic and economic opportunities: Coal-based DME can reduce dependence on imported LPG, improve energy security and lower foreign exchange outflow. It also makes the energy system less vulnerable to external supply disruptions.
3. High ash content of Indian coal: Indian coal contains more ash than the cleaner coal used in China’s coal-to-chemicals industry. This creates technical challenges for efficient coal gasification.
4. Limited gasification capacity: India’s present coal gasification capacity is much lower than the government’s target. Expanding this capacity will require sustained industrial investment and technological development.
5. Execution is the remaining challenge: Policy intent has already been established. The next step is to build the same industrial discipline, engineering capability and technical depth that transformed India’s refinery sector.

Way Forward

1. Strengthen indigenous technological capability: Continue investing in research, process engineering, metallurgy and skilled manpower to build long-term industrial capability.
2. Expand coal gasification capacity: Scale up coal gasification plants to support large-scale domestic production of DME and reduce dependence on imported LPG.
3. Promote institutional collaboration: Strengthen cooperation among research institutions, government agencies and industry to accelerate technology development and commercial adoption.
4. Focus on effective implementation: Ensure timely execution of the coal gasification programme so that policy support is converted into industrial capability and energy security.
5. Follow the refinery model: Apply the same long-term commitment to innovation, technical learning and engineering excellence that enabled India’s refineries to respond successfully during the Hormuz crisis.

Conclusion

The Strait of Hormuz crisis showed that indigenous scientific capability is India’s strongest safeguard against energy disruptions. Refinery flexibility helped manage the immediate crisis, but long-term energy security requires reducing import dependence. Building a strong coal chemistry ecosystem through sustained innovation, industrial capability and effective implementation can create a permanent strategic asset and strengthen India’s future energy resilience.

Question for practice:

Examine how India’s response to the Strait of Hormuz crisis highlights the need to build coal chemistry capability for achieving long-term energy security.

Source: The Hindu