The government has stated that urea production through coal gasification can become economically viable only when a large number of plants adopt the technology, highlighting the potential for more environmentally friendly and cost-effective urea production.

In reply to media queries, officials of the Ministry of Chemicals and Fertilisers mentioned that they were working towards modernising the fertiliser industry of the country and taking steps to upgrade the domestic industry with the introduction of advanced coal gasification technology as a transition route for sustainable and competitive urea production.

Coal gasification is a process in which coal is converted into synthesis gas (syngas), a mixture of hydrogen and carbon monoxide, which can be used as feedstock for ammonia and urea production.Those who believe in the technology argue that if it is coupled with carbon capture and utilisation (CCU), it will help achieve energy security for the fertiliser industry and minimise reliance on LNG in India.

Early capital costs are still an issue but the economic payback is expected to increase dramatically as several plants adopt the technology and supply chains develop and operational efficiencies are achieved, officials said. The scaling up of production will lead to a reduction in per-unit costs, thereby improving competitiveness of urea produced in India in the international market.

The government is promoting investment in coal gasification projects through new policy incentives, providing infrastructure support and applicable financing mechanisms, government sources noted. These include a number of incentives such as possible tax relief, assistance with technology, and simplified regulations to promote private sector involvement.

The reasons for the focus on coal gasification don't diminish the broader clean energy goals, officials pointed out, but complement a diversified strategy for the transition – including greater use of renewable energy, improved energy efficiency within fertiliser plants and support for long-term sustainability targets.

The fertiliser industry is one of India's key industries and plays a vital role in ensuring food security and enhancing agricultural productivity in India. Efforts to reduce import dependency and the cost of industrial production can help farmers, as well as support national efforts to modernise industrial processes.

Industry analysts applauded the government's position, saying that if technological efficiencies and carbon management systems are fully integrated, coal gasification-based production could become commercially viable in the medium term. They also pointed out the need for a long-term implementation strategy to take into account economic, environmental and strategic priorities.