Or start off by using it purely as an explosive ratherr than a propellant, for undermining enemy fortifications...
Not only you would need a big amount of gunpowder (that wasn't exactly cheap) to make a worthwhile hole in a wall, but you have to bury the charge to have a maximum efficiency. In the same time that this operation is made, you have to protect sappers against attacks from defenders (artillery, quick hit-and-run, possible counter-measures such as larger and bigger walls foundations).
Basically making the same that for other siege features that was as efficient (regarding medieval use and quality of gunpowder) such as sape with a cost from gunpowder use that was expansive.
I don't think anyone should have made that, if the same result can be reached with less charges, or from a far range enough to dispense the hazard.
Re alchemy, by the way, apparently there was a tradition of this in India too.
It seems that you had indeed a proto-chemical tradition, but I don't know if it was close to Chinese or Hellenistic (and successors in Muslim and Christian worlds) features? Do you have more knowledge about it?
I seem to recall that the WRG rules for wargaming with miniatures allowed at least one Islamic army-list to include some troops who used staff-slings for launching missiles of this type.
200m of extreme range for a particularly fitting ammunition.
Using it with grenades would certainly limit it and considering that grenades weren't widely used before the XVIII due to technological limitations (cast iron really made them efficient in open battlefied) and that before this date, grenades were essentially inciendary weapons (that aren't the most useful on battlefield, where you can't really control a fire that you'll have with some luck ignited on grass, if it's dry enough), I don't think it could be used this way outside naval and siege warfare.
And even there, I don't think it could replace more ancient feature : gunpowder was expansive to produce. Using it in replacement of bow/crossbow/mechanical artillery would be too costly before some experience, some techniques are understood and assimilated.
And when it would be, it's most certain that weapons with less random results would be preferred, as OTL.