An auto-component manufacturer is assessing possibilities to get gas produced from biomass.

A transformer supplier is thankful to have an order book of green transformers to execute, as those based on mineral oil have taken a hit.

Alternative fuels are back in focus, capturing both client interest and government policy attention.

Reliance Industries, in its latest annual report, said it aimed to build integrated compressed biogas (CBG) hubs capable of producing 1 million tonnes annually over the next five years.

For now, however, its operating capacity stands at just 270 tonnes per day across 35 plants. Adani Total Gas reported daily production of 7.5 tonnes.

The broader industry reflects a similar gap between ambition and execution.

India, as of January, had 132 CBG plants producing 920 tonnes per day.

Half of India’s crude and a quarter of its natural gas pass through the Strait of Hormuz.

The current blockade has forced Indian businesses to scout for alternative fuels, hoping this supply crunch will finally give cheaper, homegrown alternatives their time to shine.

Several viable paths exist — including ethanol, biogas, green hydrogen, syngas, and its more processed form, Dimethyl Ether (DME).

While the groundwork for each had been laid well before the US administration's geopolitical manoeuvres in West Asia, none besides ethanol has made significant progress.

Alternatives In The Time Of War

In April, India’s LNG import bill rose to Rs 10,298 crore for 1.8 MMT, up from Rs 10,080 crore for 2.1 MMT during the same period in 2025—meaning India paid more for less volume.

Anticipating import volatility, India has been developing a domestic alternative of compressed biogas or CBG. Over the last few years, India has rolled out ambitious CBG plans, backed by massive capacity targets from major conglomerates like Adani and Reliance Industries.

In 2023, the country targeted 5,000 commercial plants and 15 million tonnes of CBG production by 2024-25.

Those goals have since been pushed back to 2030.

Coal gasification is yet another alternative that has languished with not much to show except for one company – Jindal Steel’s coal gasification capacity.

Similarly, fertiliser makers in India are feeling the pinch with ammonia supplies, where an alternative exists – green ammonia, which can be produced through water electrolysis.

Alkyl Amines Chemicals, a Mumbai-based manufacturer of speciality chemicals including agro-chemicals, recently informed analysts that, after facing a two-week shortage of ammonia, the company and the industry are sourcing ammonia at twice the regular costs.

Other industry players are feeling the squeeze too.

Shree Pushkar Chemicals and Fertilisers, a producer of fertilisers, dyes and other chemicals, was recently forced to delay the launch of a new plant, citing severe supply shortages and cost escalations.

News reports said that Indian Farmers Fertiliser Cooperative Ltd (IIFCO)’s Paradip unit was also facing an ammonia shortage. IIFCO Paradip is one of the multiple fertiliser makers that are offtakers in the green ammonia tenders floated last year.

Again, while India has already allocated 862,000 TPA in green hydrogen production tenders, the operational capacity is almost nil, as most projects are still under development.

Green hydrogen can be converted to green ammonia. India awarded multiple tenders for the fertiliser company’s procurements at globally cheaper rates last year.

These tenders are expected to go online within three years of signing purchase agreements. Acme Group, which won the maximum tenders to supply green ammonia, signed the purchase agreements this March.

Ethanol, a biofuel, is perhaps the only hero on India’s alternate fuel report card. Industry executives noted how India has achieved 20% ethanol blending in petrol—ahead of the original target timeline, from blending levels of nearly 1.5% a decade ago.

What Ails

For ethanol, where progress has been impressive, the next phase of growth will be more complex.

“The progress on CBG so far has not been very inspiring for several reasons. Primarily, due to challenges in getting the right structure where the supplier and buyer of feedstock can connect. Further, there is market and price for the gas produced, but the price remains an issue for the fertiliser products,” Gaurav Kumar Kedia, who serves as the Chairman of the Indian Biogas Association (IBA), told The Core.

Scaling beyond E20 blending, adapting static applications like gensets, and mirroring the success of ethanol-blending in the diesel market will demand comprehensive structural upgrades across the fuel, automotive, and feedstock sectors.

“The current challenges are about scaling the ecosystem sustainably and efficiently. On the manufacturing side, feedstock availability and economics remain important considerations,” said Atul Mulay, president – corporate strategy at Praj Industries, adding, “Another important challenge is infrastructure readiness. As India moves toward higher ethanol blends, fuel distribution systems, storage, and logistics need continuous upgrading. Vehicle compatibility is also an important factor.”

Alternatives such as green hydrogen and green ammonia are yet to prove themselves against the usual challenges of a new industry.

Despite the record level of price discovery last September, industry experts back then had listed the cost of machinery and the necessity of transmission lines for green power (needed to make green hydrogen) as weak links that needed to be addressed.

Coal gasification, despite several attempts, has been unable to see major investments, with some noting the need for better blending directive policies and development of proven technology.

PTI reported that blending of 20 % dimethyl ether (DME) — produced from coal gasification — with LPG could reduce LPG imports by about 6.3 million tonnes annually, leading to a saving of forex of up to $4.04 billion per year, quoting an EY Parthenon report.

With the start of the West Asia crisis, Jindal Steel, the only company with a functional coal gasification unit, has started using synthetic gas (syngas) made through coal gasification, in its re-heating mills instead of propane.

The gas propane is one of the many petro products India imports from West Asia, and is also a key component in LPG. People in the know added that syngas is 30 per cent cheaper to use in place of propane.

While companies face no shortage of capital, they remain hesitant to invest due to lingering uncertainty over profitability.

Spotlight Got Brighter

Industry executives agree that over the last month, there has been an increased emphasis seen across alternatives. Kedia from the Biogas Association also believes “there would be more impetus for alternate energy and in the molecules space, biogas should definitely see traction. We are hopeful of more policy announcements.”

Those at Jindal Steel, according to people in the know, have also received queries from other Indian businesses both for knowledge sharing and third-party sourcing of the alternate gas.

Some of this optimism is already being translated into policy announcements. On May 13, the Union Cabinet approved a Scheme for Promotion of Surface Coal/Lignite Gasification Projects with a financial outlay of Rs 37,500 crore.

The scheme incentivises setting up surface coal/ lignite gasification projects by offering a financial incentive of up to 20% of the plant and machinery cost. The metal industry, which already has coal supply chains in place and use for syngas, can emerge as an immediate beneficiary of the scheme.

More recently, on May 22, Prime Minister Narendra Modi called for exploring alternative energy sources, amid the West Asia crisis.

The prime minister is said to have stressed the need to focus on the future rather than past complacency or regrets. Any effort made today to bolster most of the alternate fuel sourcing on a large scale will take time to fructify – upwards of a year if not more, to set up the required raw material sourcing and machinery.

India’s present-day West Asia crisis, however, does hold potential to prepare better for any future energy security woes.