India’s Green Hydrogen Mission: Opportunities and Policy Gaps

INTRODUCTION 

India stands at a critical place in its energy transition journey. With ambitious climate commitments and a growing economy hungry for clean energy, the country has launched one of the world’s most ambitious green hydrogen programs. The National Green Hydrogen Mission, approved in January 2023 with an initial outlay of ₹19,744 crores, aims to position India as a global hub for green hydrogen production and export^[1].But as with any pioneering initiative, the mission presents both remarkable opportunities and significant policy challenges that need addressing.

UNDERSTANDING GREEN HYDROGEN AND INDIA’S VISION

Green hydrogen is hydrogen produced through electrolysis of water using renewable energy sources like solar and wind power. Unlike grey hydrogen, which is derived from fossil fuels and accounts for most of today’s hydrogen production, green hydrogen produces zero carbon emissions during its production process. This makes it a promising solution for decarbonizing hard-to-abate sectors such as steel, cement, heavy transport, and fertilizers.

India’s green hydrogen mission is built on an ambitious foundation. The country aims to develop a green hydrogen production capacity of at least 5 million metric tonnes per annum by 2030, with an associated renewable energy capacity addition of about 125 gigawatts^[2]. This isn’t just about domestic consumption. India envisions becoming a major exporter of green hydrogen, leveraging its abundant solar and wind resources, relatively low renewable energy costs, and growing technological capabilities.

THE OPPORTUNITIES : WHY GREEN HYDROGEN MATTERS FIR INDIA 

The opportunities presented by green hydrogen are multifaceted and could reshape India’s energy landscape in profound ways.

ENERGY SECURITY AND IMPORT REDUCTION 

India currently imports over 85% of its crude oil and about 53% of its natural gas requirements^[3]. This dependency exposes the country to price volatility and geopolitical risks. Green hydrogen offers a pathway to reduce this vulnerability. By producing hydrogen domestically using renewable resources, India can substitute imports in sectors like fertilizers, where hydrogen is a key feedstock for ammonia production. The country’s fertilizer industry alone consumes nearly 5 million tonnes of grey hydrogen annually, presenting an immediate market for green alternatives.

INDUSTRIAL DECARBONISATION 

India’s heavy industries contribute significantly to its carbon footprint. The steel sector, for instance, accounts for about 12% of the country’s total CO2 emissions. Green hydrogen can replace coking coal in steel production through direct reduced iron processes, potentially cutting emissions dramatically. Similarly, the cement industry, refineries, and chemical sectors could benefit from hydrogen-based processes. This industrial transformation isn’t just about meeting climate goals; it’s about ensuring these sectors remain competitive in a world increasingly focused on carbon footprints and border adjustment mechanisms.

ECONOMIC GROWTH AND JOB CREATION 

The green hydrogen sector could create substantial employment opportunities. Estimates suggest the mission could generate over 600,000 jobs across the value chain, from renewable energy deployment and electrolyzer manufacturing to hydrogen storage and transportation^[4]. Additionally, developing domestic manufacturing capabilities for electrolyzers and related technologies could reduce import dependence and foster innovation. India’s existing strengths in renewable energy deployment, chemical engineering, and software services provide a solid foundation for building this ecosystem.

EXPORT POTENTIAL 

With some of the world’s cheapest solar power and ambitious renewable energy targets, India could emerge as a competitive green hydrogen exporter. Countries like Japan, South Korea, and those in Europe are planning to import large quantities of green hydrogen to meet their decarbonization goals. India’s proximity to potential Asian markets and its extensive coastline provide logistical advantages. If India can scale production efficiently, it could tap into a global market projected to be worth hundreds of billions of dollars by 2050.

THE POLICY GAPS: CHALLENGES THAT NEED ATTENTION 

Despite the promise, India’s green hydrogen mission faces several policy and implementation challenges that could hinder its success if left unaddressed.

INFRASTRUCTURE DEFICIT 

The most glaring gap is infrastructure. Green hydrogen requires dedicated pipelines, storage facilities, and refueling stations, none of which exist at scale in India today. While the government has announced incentives for production, the infrastructure for transportation and distribution remains underdeveloped. Blending hydrogen into existing natural gas pipelines is one interim solution, but India’s gas pipeline network itself is limited compared to developed nations. Without a clear infrastructure roadmap and investment framework, the hydrogen produced under the mission may struggle to reach end users efficiently.

HIGH PRODUCTION COSTS

While renewable energy costs have declined dramatically, green hydrogen production remains expensive compared to grey hydrogen. Current estimates suggest green hydrogen costs between $4 to $6 per kilogram in India, while grey hydrogen costs around $1 to $2 per kilogram^[5]. Although the mission includes production-linked incentives, the quantum and duration of support need to be sufficient to bridge this cost gap during the transition period. There’s also uncertainty about how long subsidies will last and whether they’ll be adequate to make Indian green hydrogen competitive internationally.

ELECTROLYZER MANUFACTURING ECOSYSTEM 

India currently has limited domestic manufacturing capacity for electrolyzers, the critical equipment for green hydrogen production. Most electrolyzers are imported, adding to costs and creating dependency. While the mission includes incentives for electrolyzer manufacturing, developing a complete supply chain including specialized materials, catalysts, and components requires sustained policy support, research and development funding, and technology partnerships. The policy framework for technology transfer and intellectual property in this sector remains unclear.

DEMAND CREATION CHALLENGES 

Building supply is only half the equation; creating demand is equally critical. While sectors like fertilizers and refineries are natural early adopters, they operate on thin margins and may resist switching to costlier green hydrogen without mandates or strong incentives. The mission needs clearer demand-side policies, such as green hydrogen purchase obligations for certain industries, preferential procurement rules, or carbon pricing mechanisms that make green hydrogen economically attractive. Currently, these demand-creation mechanisms are either absent or inadequately defined.

REGULATORY AND CERTIFICATION FRAMEWORKS 

For India to participate in the global green hydrogen trade, robust certification and standards are essential. International buyers will require proof that hydrogen is genuinely “green” with low carbon intensity. While India is developing certification mechanisms, harmonizing these with international standards remains a work in progress. Additionally, safety regulations for hydrogen handling, storage, and transportation need strengthening. Hydrogen is highly flammable and requires different protocols than conventional fuels, but India’s regulatory framework in this area is still evolving.

WATER AVAILABILITY CONCERNS 

Green hydrogen production through electrolysis is water-intensive, requiring about 9 liters of water per kilogram of hydrogen produced. Many of India’s regions with excellent solar resources, such as Rajasthan and Gujarat, face water scarcity. While using seawater with desalination is an option for coastal projects, this adds to costs and energy requirements. The mission lacks comprehensive guidelines on water sourcing, particularly regarding balancing industrial water needs with agricultural and domestic requirements in water-stressed regions.

FINANCING GAPS 

The ₹19,744 crore allocation, while substantial, may prove insufficient for achieving the mission’s ambitious targets. Industry estimates suggest that meeting the 5 million tonne target would require investments of over ₹8 lakh crores (approximately $100 billion)^[6]. Attracting this level of private investment requires clear long-term policy signals, bankable business models, and risk mitigation mechanisms. The current policy framework doesn’t adequately address financing risks, particularly for first-of-a-kind projects where technical and market risks are high.

THE PATH FORWARD 

To realize the full potential of green hydrogen, India needs to address these policy gaps with urgency and clarity. This means developing a comprehensive infrastructure plan with timelines and investment commitments, extending and clarifying subsidy mechanisms to provide long-term certainty, creating strong demand-side policies including mandates for green hydrogen adoption in key sectors, fast-tracking the development of domestic electrolyzer manufacturing through targeted support and research partnerships, establishing clear water allocation policies that balance industrial needs with sustainability, and harmonizing certification and safety standards with international frameworks.

The green hydrogen mission represents more than just an energy policy; it’s a vision for India’s sustainable industrial future. The opportunities are immense, from energy security and job creation to positioning India as a clean energy leader. However, turning this vision into reality requires bridging the policy gaps that currently exist. With coordinated action from government, industry, and research institutions, India can overcome these challenges and truly become a green hydrogen hub for the world.

[1] Ministry of New and Renewable Energy, Government of India. (2023). National Green Hydrogen Mission.

[2] Press Information Bureau, Government of India. (2023). Cabinet approves National Green Hydrogen Mission.

[3] Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas. (2024). Snapshot of India’s Oil and Gas data.

[4] Council on Energy, Environment and Water (CEEW). (2023). Green Hydrogen Employment Potential in India.

[5] International Energy Agency. (2023). Global Hydrogen Review 2023.

[6] NITI Aayog. (2022). Harnessing Green Hydrogen: Opportunities for Deep Decarbonisation in India.