New Delhi, Aug 1 (IANS): To cut oil import costs and reduce pollution through alternative fuels, the government is considering indigenous production of methanol from coal -- a pilot project for which is being set up in Odisha's Talcher, an official said on Monday.

Road Transport Minister Nitin Gadkari chaired a high level meeting on bio-fuels and methanol with experts, including NITI Aayog Member V.K. Saraswat who has been working on methanol-based fuel research.

During the meeting, Gadkari stressed on the need for clean fuel that can substitute fossil fuels, cut import cost and is cheap, a ministry spokesperson said.

While methanol is a promising fuel which is also being used in the West as well as China, but in most places it is being made from natural gas.

"This would be expensive for India since we import gas. For us, the best option is making methanol from coal. While technology exists for this, it is not commercially established yet," the official said.

India is presently importing methanol from Saudi Arabia and Iran. Indigenous production at present is very low as it is not cost effective due to import cost of natural gas.

"If we start making it from coal, it will become cost effective. Pilot project for coal to methanol is in Talcher," the spokesperson said, adding that the NITI Aayog is working on a roadmap for manufacturing methanol which can also be made from municipal solid waste.