By Preeti Wadhwa
The green hydrogen sector is rapidly gaining momentum in India’s clean energy transition. With the country targeting net zero emissions by 2070, green hydrogen and its derivatives such as green ammonia and green methanol provide practical pathways to decarbonise hard-to-abate sectors, including steel, fertilisers, cement, refining, chemicals, heavy-duty transport, shipping and aviation.
India’s competitive advantage lies in its abundant renewable energy resources. With over 242 GW of installed renewable capacity, including 123 GW of solar and 52 GW of wind, the country is well positioned to produce cost-competitive green hydrogen and its derivatives. Supported by favourable policies under the National Green Hydrogen Mission (NGHM), India has the potential to become a global hub for green hydrogen production, exports and innovation. The green hydrogen market is now gradually progressing from project announcements to actual implementation. Scaling up this market further will require strategic planning, policy incentives, infrastructure development, domestic demand creation and export ambitions.
A look at the recent developments in the segment, India’s export potential, key challenges and the way forward…
Recent developments
India’s green hydrogen sector has seen notable progress in recent months. Key developments include:
- In March 2025, the Solar Energy Corporation of India (SECI) announced the results of the second tranche of its SIGHT programme (Mode 1) for green hydrogen production, awarding a total annual capacity of 450,000 metric tonnes (mt) with incentives amounting to Rs 22.39 billion. Under Bucket 1, 448,500 mt was allocated to AM Green Ammonia India, Waaree Clean Energy Solutions, Green Infra Renewable Energy Farms and L&T Energy Green Tech, each receiving 90,000 mt with incentives of Rs 5.13 billion, Rs 5.1 billion, Rs 4.37 billion and Rs 3 billion respectively. Reliance Green Hydrogen and Green Chemicals secured 49,000 mt with an incentive of Rs 3.67 billion, while Suryadeep KA1 Project (InSolare Energy) received 19,000 mt with Rs 456 million, GH2 Solar 10,500 mt with Rs 471 million and Oriana Power 10,000 mt with Rs 300 million. Under Bucket 2, Matrix Gas and Renewables was awarded 1,500 mt with an incentive of Rs 178.5 million.
- In the same month, the Ministry of New and Renewable Energy (MNRE) approved five pilot projects to use hydrogen in buses and trucks. These projects comprise 37 vehicles, with 15 powered by hydrogen fuel cells and 22 by hydrogen internal combustion engines, along with nine hydrogen refuelling stations. The vehicles will operate across 10 routes in India, including Delhi to Agra, Pune to Mumbai and Ahmedabad to Surat. Leading companies, such as Tata Motors, Reliance Industries, NTPC, Agency for New and Renewable Energy Research and Technology, Ashok Leyland, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited and Indian Oil Corporation Limited, are implementing these projects.
- In April 2025, the MNRE launched the Green Hydrogen Certification Scheme of India (GHCI) to establish a framework for certifying green hydrogen production, and to ensure transparency, traceability and credibility across the market.
- Innovation and cluster development are key priorities in the segment. In June 2025, the MNRE released guidelines for Hydrogen Valley Innovation Clusters, allocating Rs 1.72 billion for the development of four clusters that will link producers with consumers. The initiative aims to identify and support regions with potential for large-scale hydrogen development.
- In August 2025, SECI announced the results of its Mode 2A, Tranche I green ammonia auction, awarding 13 projects with a combined capacity of 724,000 tonnes per annum (tpa) for supply to fertiliser plants. The auction provides market certainty to producers through 10-year contracts supported by production-linked incentives of Rs 8.82 per kg in the first year, which will reduce to Rs 7.06 per kg and Rs 5.30 per kg in the next two years. Tariffs ranged from Rs 49.75 per kg to Rs 64.74 per kg. ACME secured both the lowest and highest tariffs, winning a landmark bid to supply 100,000 tpa to IFFCO in Paradeep, Odisha, at Rs 49.75 per kg and 20,000 tpa to Indorama India in Haldia, West Bengal, at Rs 64.74 per kg.
- In September 2025, the government launched a Rs 1 billion call for proposals to support start-ups innovating in green hydrogen, offering up to Rs 50 million per project for pilot initiatives in hydrogen production, storage, transport and utilisation.
Export potential and global partnerships
While domestic demand for green hydrogen is gradually rising, exports remain key to India’s hydrogen strategy. The gap between production potential and immediate domestic consumption makes exports critical for scaling up production and reducing costs.
According to a recent report by EY and the the FICCI, “India’s Green Hydrogen Ecosystem: Strategic Opportunities, Key Challenges and Demand Potential”, India could capture 10 per cent of the global hydrogen market by 2030 and export around 10 mmt of green hydrogen and green ammonia annually. Several developers have secured offtake agreements with international buyers. India and Japan signed a heads of terms agreement for green ammonia exports. Sembcorp Industries will produce green ammonia in India using renewable energy, Kyushu Electric Power will blend it with coal for thermal power in Japan, Sojitz Corporation will facilitate the producer-buyer process and NYK Line will handle maritime transport.
Europe, through its REPowerEU plan, targets 20 million tonnes of hydrogen consumption by 2030, with half of this expected to be imported. Meanwhile, owing to their limited domestic renewable resources, Japan and South Korea are expected to remain key demand centres. Analysts project that India could achieve $3 billion-$5 billion in annual hydrogen exports and $7 billion-$15 billion in import substitution in the next decade, provided production costs decline as projected. However, infrastructure readiness will determine India’s export competitiveness going forward. Hydrogen and its derivatives require specialised handling, including cryogenic storage, high-pressure facilities and dedicated terminals. High port charges, such as those at Gopalpur in Odisha, pose risks to project viability. Addressing these logistical and regulatory barriers is essential for India to compete with major exporters such as Australia and the Middle East.
Challenges and the way forward
Despite significant progress, the large-scale adoption of green hydrogen faces multiple challenges. Cost competitiveness remains a major concern. Currently, green hydrogen costs Rs 350-Rs 500 per kg ($4.1-$5.9 per kg) compared to Rs 150-Rs 220 per kg ($1.8-$2.6 per kg) for grey hydrogen, as per the EY-FICCI report. Additional processing such as liquefaction or ammonia conversion can increase costs by Rs 150-Rs 250 per kg. However, declining renewable tariffs, domestic electrolyser manufacturing, fiscal incentives and increasing production are expected to reduce costs by 40 per cent by 2030, bringing prices down to Rs 260-Rs 310 per kg ($3-$3.75 per kg). Recent auctions have already begun to show positive signs of decline in green hydrogen costs. Factors such as low-cost renewable electricity, a waiver of interstate transmission charges, the reduced GST rate of 5 per cent, and electrolyser cost reductions of 7-10 per cent over the next five years will further strengthen competitiveness.
Infrastructure and logistics also present challenges. Most Indian ports lack hydrogen-compatible storage, transport and bunkering facilities. High port charges, limited intermodal connectivity and the absence of hydrogen-ready pipelines increase costs and slow down execution. While the designation of Kandla, Paradeep and Tuticorin ports as hydrogen hubs is a positive step, rapid investment in port infrastructure, cryogenic storage and harmonised safety standards is essential to enable efficient domestic and export operations.
Market development and demand creation are equally important. Currently, 90 per cent of hydrogen use in India is captive, leaving limited tradable volumes. Without large-scale, predictable demand, securing project financing remains challenging. Policy mechanisms such as blending mandates, carbon pricing and public procurement can promote consumption. Long-term offtake agreements, like those that follow SECI’s green ammonia auctions, must be extended across the fertiliser, steel and transport sectors. Assured domestic demand will stabilise the market and support a tradable hydrogen ecosystem.
Further, electricity is the key input for producing green hydrogen through electrolysis, making reliable, clean power critical. In India, project development faces hurdles due to limited round-the-clock renewable supply and delays in transmission and grid connectivity. These delays could extend beyond 2030, potentially slowing project timelines. To meet the NGHM targets, an estimated 60-80 GW of round-the-clock renewable capacity will be required by 2030. Strengthening grid infrastructure and ensuring timely coordination among government agencies, developers and utilities will be crucial to driving progress in India’s green hydrogen transition.
Financing and risk management also remain significant challenges due to high capital intensity and uncertain revenue models. Green bonds, blended finance and credit guarantees can help mitigate risk, while public-private partnerships can accelerate infrastructure development. International climate finance and multilateral funding can bridge early-stage viability gaps, particularly for export-oriented projects that demand substantial upfront investment.
Further, regulatory frameworks need to be strengthened. India’s green hydrogen market is at a nascent stage, characterised by bilateral contracts, limited transparency and the absence of trading platforms. While GHCI provides traceability and credibility, the country also needs unified safety regulations, market benchmarks, and a dedicated hydrogen regulatory authority to maintain long-term market stability and drive investor confidence.
Looking ahead, India’s green hydrogen journey will depend on how effectively these challenges are addressed. With policy innovation, supportive investment frameworks and international collaboration, the country can achieve cost-competitive production, reliable infrastructure and strong domestic demand. In addition, it can meet its 2030 target of 5 mmt annual production while positioning itself as a global leader in exports, thereby decarbonising hard-to-abate industries, enhancing energy security, reducing import dependence and strengthening industrial competitiveness.
