Learning from India: How to Reduce Dependence on Middle Eastern Fuel Imports
India is accelerating its coal gasification programme as a strategy to reduce dependence on energy imports from the Middle East. This move has gained further attention after the Iran-United States conflict and disruptions in the Strait of Hormuz briefly sparked concerns over crude oil, LPG, and fertiliser feedstock supplies to energy-importing nations.
The Indian government recently approved an incentive scheme worth US$3.9 billion, or approximately Rp69.42 trillion, to drive the development of coal gasification projects. The programme is expected to strengthen national energy security while reducing imports of fuel, fertilisers, and chemical industry raw materials.
‘Coal gasification creates options and energy resilience, not a path to completely eliminate import dependence,’ said Dastur Energy CEO Atanu Mukherjee, as quoted by Channel News Asia on Friday (19/6/2026).
Unlike conventional coal-fired power plants that burn coal directly, gasification technology converts coal into synthetic gas, or syngas. This gas can then be processed into various products such as methanol, ammonia, dimethyl ether (DME), synthetic natural gas, and even hydrogen. DME itself can be used as a substitute for imported LPG.
India views this technology as a logical solution because it possesses the world’s fifth-largest coal reserves. On the other hand, the country still imports around 88% of its crude oil needs and nearly half of its natural gas requirements. The government is even targeting the gasification of 100 million tonnes of coal per year by 2030 through the National Coal Gasification Mission launched in 2021.
Nevertheless, analysts assess that the path to this target will not be easy. Mukherjee estimates that India needs investment between US$55 billion and US$75 billion, equivalent to Rp979 trillion to Rp1,388 trillion, over 10 to 15 years to build a mature gasification ecosystem. Such investment is expected to cut the energy import bill by around US$20 billion (Rp356 trillion).
The biggest challenge comes from the quality of India’s domestic coal, which has a very high ash content, reaching 30%-45%. This means that gasification technology commonly used in China cannot be directly applied. In addition, the gasification process requires large amounts of water, while many of India’s coal reserves are located in water-scarce regions.
Another obstacle is the slow pace of project development. India currently has only one commercial-scale coal gasification facility with a capacity of about 2 million tonnes per year. To achieve the 2030 target, the country must build dozens of new facilities in less than five years. Several observers consider this target difficult to reach.
Despite this, India is continuing its efforts in the hope of creating long-term protection against global energy market volatility. The government also hopes that the prepared incentives will attract private investment of around US$35 billion (Rp623 trillion) in the coming years.
Similar efforts are being undertaken by other Asian countries. China is reportedly building and planning 13 coal-to-gas projects to reduce dependence on natural gas imports. Meanwhile, Indonesia has announced six coal gasification projects worth US$9.8 billion (Rp174.44 trillion) focused on producing DME as a substitute for imported LPG.
However, Indonesia’s experience serves as an important lesson. A report by the Institute for Energy Economics and Financial Analysis (IEEFA) shows that coal-based DME projects are only economically attractive when global LPG prices are high. When LPG prices fall, DME production costs become less competitive, risking the projects’ investment appeal.
Therefore, experts argue that coal gasification should not be viewed as an instant solution to short-term energy crises. Instead, the technology should be positioned as a long-term energy resilience instrument that can help energy-importing countries reduce the risk of supply disruptions from the Middle East in the future.