India’s pursuit of green hydrogen is driven by the need to enhance energy security, reduce import dependence, and achieve decarbonisation. The country currently imports 88 per cent of its oil and 50 per cent of its natural gas, exposing it to foreign exchange volatility and geopolitical risks. It also imports a substantial amount of ammonia for the domestic fertiliser industry. To address these concerns, localising energy and fertiliser production is crucial.
The country’s over 220 GW of clean energy capacity, including 108 GW of solar and over 50 GW of wind power, provides a foundation for scaling green hydrogen production. Building on this, green hydrogen offers an opportunity to unlock new economic sectors and establish India as a primary exporter of clean energy. While the country traditionally exports refined petroleum products, exporting green ammonia, methanol, sustainable aviation fuel, electrolysers, and even engineering talent would mark a new frontier. This approach aligns with the country’s goals of reducing imports, increasing exports, and lowering forex dependency.
Green hydrogen export potential
Currently, the country consumes about 7 million tonnes of hydrogen annually, mostly in refineries and fertilisers. This is expected to grow at a compound annual growth rate of 6.5 per cent between 2025 and 2040. India enjoys strategic advantages such as a unified grid, abundant renewable energy sources, a skilled workforce, competitive labour costs, and geographical positioning that allows exports to Europe, East-Asian countries and Australia. Further advantages include India’s low engineering, procurement and construction costs, fast permitting processes through single-window clearances, and rapid construction timelines, enabling it to build plants in three to five years, compared to five to seven years elsewhere.
The National Green Hydrogen Mission allocates $2.4 billion in incentives, of which $2.1 billion supports the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. The SIGHT programme provides incentives for electrolyser manufacturing, green hydrogen production, and green ammonia production. In total, 27 companies have received Rs 100 billion in incentives. These companies are pursuing vertically integrated models – from electrolyser manufacturing upstream to ammonia and methanol production midstream, and green steel and iron downstream. While these incentives are a good start, they are modest compared to global benchmarks such as the US Inflation Reduction Act’s $3 per kg credit or Australia’s $2 per kg Headstart Programme. Nonetheless, India’s advantage lies in lower labour and land costs, cheaper renewable energy, and a long coastline with access to many ports. These advantages make even the smaller incentives more impactful.
The green hydrogen export market holds vast potential. Europe, which accounts for 50-60 per cent of low-carbon hydrogen demand, is the primary target, followed by Singapore, South Korea, and Japan. Tender-based demand in Europe – such as Germany’s Hintco, the EU Hydrogen Bank, and SAF-related schemes like Refuel EU – is growing rapidly. Hintco awarded 40 kilotonnes per annum(ktpa) at €811 per tonne last year and is offering €2.4 billion more this year. The EU Hydrogen Bank awarded 158 ktpa, and more is expected through maritime and aviation fuel regulations.
Ports across the country, both 13 major and over 300 non-major, further bolster India’s export capabilities. Notably, Paradip (Odisha), Tuticorin (Tamil Nadu), and Kandla (Gujarat) have been designated as green hydrogen hubs, while Gopalpur (also in Odisha) is emerging as a major export hub with strong state and central government support. Gopalpur is surrounded by key fertiliser and refinery units as well as Odisha’s steel industry, which could benefit from green hydrogen for green steel production.
On the export front, India is targeting Europe and East Asia, where the demand for clean hydrogen is accelerating due to climate commitments and decarbonisation targets. Several Indian companies have announced over 9.3 million tonnes per annum of green ammonia production capacity for export, with projects by AM Green, NTPC, ACME, and ReNew, Hygenco Green Ammonia, Ocior Energy, and Avaada already under way. Many of these are in advanced offtake conversations with global companies such as Yara, Uniper, BASF, Kyushu Electric, Ameropa, and the IHI Corporation. Close to 2 million metric tonnes per annum of green ammonia export volumes are already tied up in such deals.
Overall, India’s export potential is strong. Scaling up domestic supply, deepening the industrial value chain, aligning policies across central and state levels, and securing export offtakes can firmly position it as a global export hub in green hydrogen and ammonia. With the right ecosystem, the country can capture both domestic and global opportunities in the green hydrogen economy.
Cost economics
The central challenge hindering the growth of green hydrogen in the country is its high production cost, which makes offtake difficult and slows adoption. This challenge is reminiscent of the early stages of solar and battery technologies, which initially appeared unviable but later became mainstream due to falling costs and policy support. Green hydrogen is expected to follow a similar trajectory. The overall cost of hydrogen production can be broken down into capex, opex, and other influencing factors such as weighted average cost of capital, inflation, and financing costs. Capex includes electrolyser costs, stack replacement cost, land, and the cost of setting up a renewable energy plant if using captive power. Opex primarily includes electricity cost, water cost, and operations and maintenance cost.
The cost of electricity remains the most significant driver, often determining the viability of hydrogen projects. While India is known for its low renewable energy prices, the actual landed cost of renewable energy for hydrogen production often reaches Rs 5-Rs 5.5 per unit for large grid-connected projects, which significantly impacts the hydrogen price. The cost structure varies based on the type of electrolysis technology used. Among electrolyser types (alkaline, PEM, solid oxide, and AEM), alkaline is the most common due to its relatively lower cost. PEM is gaining popularity but is 10-20 per cent more expensive due to its use of precious metals such as platinum. Solid oxide electrolysers are still in the research and development phase, while AEM is emerging as a promising hybrid with improving cost viability.
A case study of Odisha, where incentives are most robust, shows that the landed cost of hydrogen for a 10 MW PEM plant is around Rs 477 per kg, with electricity accounting for Rs 329 per kg of this. Scaling up to a 100 MW plant brings the cost down to Rs 448 per kg due to economies of scale. With Odisha’s incentives – including subsidised land, power tariffs, and exemptions – prices can fall further to Rs 374 per kg, or approximately $4.5-$5 per kg. In comparison, alkaline electrolysers show better economics, reducing costs to Rs 365 per kg under similar conditions. These figures are competitive globally, especially when compared to green hydrogen prices in the US ($5-$7 per kg), China ($5-$6 per kg), and even cheaper than grey hydrogen in refineries where natural gas is used. Only the Middle East currently produces green hydrogen below $3 per kg, primarily due to low-cost renewable energy and GW-scale projects.
To further reduce costs, key drivers include scaling up project size to GW level, bringing down electricity tariffs through cheap solar power, leveraging concessional finance for decarbonisation projects, and extending state-level support such as the Odisha model. The carbon market can also help, with green hydrogen potentially earning carbon credits worth $20-$30 each.
However, financing risks and market uncertainties remain a challenge. Green hydrogen projects face issues such as a lack of commercial offtake agreements, unproven technology at scale, and insufficient long-term policy clarity. To address these, the government is introducing demand-creation tenders for sectors such as refineries and fertilisers, setting up research centres for technology development, and encouraging end-use applications in transport, steel, and city gas networks.
Overall, while data from select projects is showing that India has global cost competitiveness to tap the export market, it still remains to be seen if such cost competitiveness can be achieved from all projects in the country. Going forward, a combination of scaling up of project size, technology maturity, central and state incentives, and market creation will steadily close the cost gap. With costs projected to fall and global demand rising, India can become a low-cost, high-volume green hydrogen producer supporting both domestic decarbonisation and international export ambitions.
The way forward
India has made some progress in the green hydrogen space, with strong export potential and inherent cost advantages. However, to solidify its position as a global leader, several critical steps must be taken moving forward. To enhance exports, developers must tap international demand points and applications like RFNBO-compliant steel, aviation fuels, and maritime fuels aligned with the International Maritime Organisation and EU regulations. At the same time, building a robust domestic supply chain is equally vital. While electrolyser stacks dominate the spotlight, they account for just 25 per cent of a hydrogen plant’s capex. The remaining 75 per cent, comprising piping, balance of plant, civil works, and infrastructure, must also be localised to create a resilient and cost-effective project ecosystem.
Furthermore, while over 9-12 million tonnes of green ammonia export capacity has been announced by India (more than double the 2030 national target of 5 million tonnes), the true test will be in execution. Projects must secure final investment decisions, financial closure, and binding offtake agreements. This will determine which announcements turn into real assets. Although India has a cost advantage including access to land and labour, infrastructure such as port-side bunkering, liquid fuel logistics, and hydrogen/ammonia licensing must also evolve. To further reduce the cost of green hydrogen, India must optimise renewable energy costs, solve the water issue, manufacture electrolysers domestically, reduce financing costs, and maintain efficient permitting systems. Currently, green hydrogen in India costs $4-$4.5 per kg, but with concerted efforts, the target of reaching around $1.8 per kg by 2030 is feasible.
Net, net, green hydrogen is now at a midpoint – no longer prohibitively expensive, but not yet mainstream. With continued efforts to enhance competitiveness, scale up projects, and create enabling infrastructure, India is well-positioned to become a major exporter of green hydrogen and its derivatives.
Based on presentations by Harish Jayaram, Adviser, Hygenco; Arjun Mehta, Adviser, Green Hydrogen India (GH2 India); and Sushmita Ajwani, Director, Power & Renewables, ICF, at Renewable Watch’s 9th annual edition of Green Hydrogen in India conference.
