India’s journey towards becoming a global manufacturing hub for electrolysers is gaining momentum, driven by progressive policies, indigenous expertise and a clear vision for the green hydrogen transition. Coordinated government support and private sector investment are fostering an ecosystem that allows manufacturers to scale rapidly, positioning India as an emerging player in the global green hydrogen market. However, a few challenges exist, which need to be addressed going forward.
This article presents key insights from a panel discussion among Shekhar Kashalikar, John Cockerill Greenko Hydrogen; Nikhil Mathew, Eastern Electrolyser; Siddharth Mayur, H2E Power Systems; Kowtham Raj, L&T Energy GreenTech; Anuj Sharma, Waaree Clean Energy Solutions; and Sanjeev Sharma, GH2 Solar, at Renewable Watch’s 10th edition of the “Green Hydrogen in India” conference and explores the emerging opportunities, key challenges and the road ahead for India’s electrolyser manufacturing ecosystem…
How government incentives are driving growth
The Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme has emerged as a key initiative that has catalysed the entire electrolyser manufacturing ecosystem in India. Unlike traditional subsidy mechanisms, the production-linked incentive structure ensures that manufacturers earn benefits only after demonstrating competitive products and securing customers, creating a natural selection process that rewards efficiency and quality. The scheme reflects careful consideration of the entire green hydrogen value chain. By distributing incentives across several players rather than concentrating them among a handful of manufacturers, the government has consciously chosen to foster a competitive ecosystem.
The timing of these incentives deserves particular attention. Unlike solar manufacturing subsidies that arrived a decade too late, electrolyser incentives have come at the nascent stage of market development. This proactive approach allows manufacturers to build capabilities before large-scale demand materialises, avoiding the scenario where early market demand is met entirely through imports. By giving visibility and certainty to the industry, the scheme has successfully attracted major industrial houses to commit significant funds to manufacturing capacity.
What distinguishes India’s policy framework from global counterparts is its stability and predictability. The green energy manufacturing policies across solar, batteries and electrolysers follow similar templates, creating familiarity and confidence among investors. This consistency matters for manufacturers planning long-term investments in facilities, research and development, and supply chain development.
Technology landscape
The Indian electrolyser landscape is characterised by a pragmatic diversity of technology approaches, with alkaline technology dominating current manufacturing plans, while other technologies such as anion exchange membrane (AEM) and solid oxide electrolysis cells represent emerging innovation frontiers.
Alkaline electrolyser technology has emerged as the natural starting point for most Indian manufacturers for compelling reasons. As a tried-and-tested technology that has operated at MW scales globally, this technology offers a relatively lower technical risk profile. The technology’s simplicity compared to proton exchange membrane or solid oxide systems, combined with India’s existing capabilities in steel fabrication, coating and electrochemical processes, creates a favourable environment for rapid indigenisation.
However, the panellists highlighted that alkaline technology alone cannot address all use cases. The “no one size fits all” approach is driving investment in alternative technologies suited for specific applications. For applications ranging from 1 kg per day to several tonnes daily, AEM presents compelling efficiency and flexibility advantages.
Solid oxide technology represents the high-efficiency choice, offering the potential to achieve the lowest power consumption among all electrolyser types. The technology’s ability to utilise waste heat from industrial processes adds another dimension to its value proposition, particularly for steel, cement and other energy-intensive industries.
The diversity in technology choices also reflects different market positioning strategies. While large manufacturers target utility-scale projects, others focus on decentralised, distributed generation models. This latter approach recognises hydrogen’s inherent challenges with storage and transportation, advocating for production as close as possible to consumption points.
Making components in India: Progress and challenges
The question of supply chain indigenisation lies at the heart of India’s electrolyser manufacturing ambitions. India’s strength in steel manufacturing provides a solid foundation for electrolyser fabrication. Carbon steel components, which constitute a significant portion of smaller stack costs, can be produced competitively with costs differing by only 2 to 3 per cent from global benchmarks. India possesses robust supply chains capable of manufacturing tie rods, washers, disc springs, end plates and other structural components with requisite precision. In addition, manufacturers have invested in testing infrastructure to test and improve quality.
The pathway to indigenising electrolyser components depends on demand materialisation going forward. Encouragingly, international suppliers of membranes and catalyst coatings are expressing willingness to establish operations in India, initially for cutting and coating activities, eventually progressing to complete production as volumes justify investment. The government could potentially accelerate this timeline through targeted incentives for critical component manufacturing, particularly electrode production, which would complement the broader electrolyser production-linked incentive scheme.
Testing and validation infrastructure represents another dimension of supply chain maturity. With developers and financiers demanding proven track records, often five years of operational data, manufacturers must invest in accelerated testing capabilities. Multiple test benches running electrodes and diaphragms under simulated conditions compress years of operational learning into months, building the credibility required for large project deployments.
Balancing capacity and demand
The Indian electrolyser manufacturing sector faces a paradoxical situation: announced manufacturing capacity significantly outpaces current tender awards and project commitments. This mismatch between supply and demand raises concerns about overcapacity, profitability and industry consolidation in the coming years.
Understanding this trend requires recognising that electrolyser manufacturing incentives deliberately preceded demand creation – a reversal of the typical sequence where tenders arrive first and manufacturing responds later. This strategic choice aims to ensure that when significant demand materialises, India possesses adequate domestic manufacturing capacity rather than seeing those orders flow to international suppliers. However, it also means the industry must navigate a challenging period where factories come online before large-scale projects reach financial close and begin procurement.
Near-term demand signals offer reasons for cautious optimism. Refinery tenders already concluded represent substantial electrolyser requirements. The recent auctions for green hydrogen and ammonia production, assuming successful project execution, translate to significant electrolyser demand over the coming years. Additional large-scale tenders from the Ministry of Petroleum and Natural Gas are anticipated, while fertiliser sector requirements add further to this pipeline as they gradually transition to green hydrogen. These multiple demand streams, if they materialise as planned, could absorb a meaningful portion of the announced manufacturing capacity.
However, the path from tender awards to actual electrolyser orders involves significant uncertainties. Not all awarded projects will necessarily source entirely from India, particularly in early phases where developers prioritise proven technology and bankability over supporting domestic manufacturing. The time mismatch – when SIGHT projects meet deadlines and when Indian manufacturing achieves full-scale production – creates pressure to import, even among developers genuinely committed to indigenisation. This tension between policy timelines and manufacturing readiness represents a critical challenge requiring careful navigation.
Interestingly, alternative demand scenarios beyond the large centralised projects could significantly alter the outlook. Distributed, decentralised hydrogen production for industrial clusters, agricultural applications and hard-to-abate sectors represents potentially massive demand that does not appear in headline tender figures. Progressive farmers, sugar factories and process industries seeking on-site hydrogen production could collectively require a significant number of smaller-scale electrolysers. Hydrogen refuelling station networks, though nascent, represent another demand vector as mobility applications develop. Successfully tapping these distributed demand sources requires different business models, financing approaches and product configurations than serving utility-scale projects.
The way forward
The global market does not yet view India as an electrolyser manufacturing destination, despite decades of operational experience among some players. Changing these perceptions demands consistent execution – meeting aggressive performance targets promised in tenders, achieving high uptime in initial deployments and building documented track records. Early export successes will also catalyse broader recognition.
The industry faces a challenging period where overcapacity, pricing pressures, technology uncertainties and demand delays will test the resolve and resources of manufacturers. The combination of supportive policy, indigenous technical capabilities, competitive cost structures and significant potential demand creates conditions where India can indeed emerge as a major electrolyser manufacturing hub. The next three to four years will prove decisive in determining whether this potential converts to reality.
The electrolyser manufacturing journey ultimately connects to India’s broader industrial and environmental aspirations – reducing import dependence, achieving decarbonisation targets, building high quality manufacturing employment and establishing technology leadership in strategic sectors. The green hydrogen value chain, with electrolysers at its core, represents an opportunity to replicate and exceed India’s solar manufacturing success story – this time capturing value earlier in the technology life cycle and across a more complete supply chain.
