India’s Green Hydrogen Sector Enters a Critical Phase of Execution

India’s National Green Hydrogen Mission (NGHM), launched in January 2023 with a target of 5 MTPA of green hydrogen by 2030, is now confronting the realities of scale-up. Initial optimism around export opportunities and large-scale production has shifted towards more practical questions: where demand will emerge, how reliably hydrogen can be produced and transported, and whether costs can be reduced in line with global benchmarks.

The Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme, the mission’s main financial instrument, has allocated incentives linked to actual hydrogen output. Around 8,62,000 TPA of capacity have been awarded, but most projects are still in pre-construction, with land, front-end engineering and offtake negotiations in progress rather than completed.

Bhupinder Singh Bhalla, Former Secretary, Ministry of New and Renewable Energy (MNRE), Government of India, says that anticipated export demand, particularly from Europe, has been slower to translate into firm long-term contracts. As a result, domestic demand creation has become the core focus.

Abhay Bakre, Mission Director, NGHM describes the period to around 2027 as “foundation years”. In his view, policy stability, a credible certification framework, and long-term offtake visibility must be established now if large volumes are to materialise in the latter half of the decade.

Demand aggregation will determine whether announced projects reach financial closure. Fertiliser producers are emerging as the first large-scale customers via green ammonia. Centralised procurement has delivered internationally competitive prices and secured roughly 7,25,000 TPA of long-term offtake, providing a clearer line of sight into revenue for early projects.

Refining is progressing more slowly. Although refiners have signalled they could replace up to 50 percent of their grey hydrogen by 2030, contracted volumes remain only a small share of the 2 lakh TPA earmarked in initial tenders. This gap between ambition and signed offtake remains a material risk.

Dr RK Malhotra, President, Hydrogen Association of India, stresses that refineries are already India’s largest hydrogen consumers. He argues that substituting part of this with green hydrogen would increase retail fuel prices only marginally, while helping refiners meet Net Zero commitments and maintain access to markets where carbon constraints are tightening.

Beyond these anchor sectors, steel, cement, city gas distribution, heavy transport, shipping and aviation are expected to play a growing role. With national steel capacity set to expand significantly, Bakre points to hydrogen-based direct reduced iron (DRI) as a key pathway for new investments, rather than relying solely on incremental efficiency gains in blast furnaces.

On the supply side, production-linked incentives support 3 GW per year of domestic electrolyser manufacturing capacity, potentially reaching 15 GW of annual output over five years. Delivering NGHM targets is likely to require several times that in installed capacity by 2030, meaning imports and joint ventures will remain important.

Technology choices are still being tested. Proton Exchange Membrane (PEM) electrolysers provide better dynamic performance but depend on costly materials; conventional alkaline electrolysers are cheaper but less flexible and face durability questions. Bakre expects ongoing innovation in stacks and balance-of-plant to reduce overall system costs and improve bankability.

For India’s engineering sector, the question is how deeply “Make in India” can be embedded into the hydrogen value chain. Anup Bhargava, Chief Strategy Officer, ISGEC Heavy Engineering Ltd, calls for an Approved List of Models and Manufacturers (ALMM) for core hydrogen equipment, mirroring solar policy. Components such as rectifier transformers and compressors can account for a substantial portion of project cost; steering incentives towards accredited domestic manufacturers could accelerate localisation. Bhargava also highlights the importance of lower GST rates on decarbonisation technologies and wider access to publicly funded materials research.

Electrolysers depend on reliable, preferably round-the-clock, access to low-carbon electricity. That places transmission at the centre of hydrogen project viability.

Manju Gupta, Executive Director, Power Grid Corporation of India, notes that India plans 500 GW of non-fossil electricity capacity by 2030, including around 400 GW of solar and wind. Approximately 230 GW of variable renewable energy is expected to connect to the Interstate Transmission System (ISTS), with infrastructure already identified for around 340 GW. Of this, 46 GW is operational, 159 GW under construction and the remainder in advanced planning or bidding.

Potential green hydrogen “hubs” identified by MNRE are now being factored into this planning. High-capacity corridors, including High-voltage Direct Current (HVDC) links, are being designed to move power from renewable-rich states such as Rajasthan and Gujarat to load centres where hydrogen and derivatives are likely to be produced.

Regulatory changes also matter. Amendments to General Network Access (GNA) regulations allow “non-solar hours” connectivity, improving utilisation of existing assets by combining solar, wind and storage. Gupta cautions that some early hydrogen connectivity applications have been withdrawn, raising the risk that transmission could be built for projects that ultimately do not proceed, complicating cost recovery and planning.

India’s hydrogen landscape will not be defined only by gigawatt-scale plants. Bakre highlights decentralised production based on biomass, for example, hydrogen from Compressed Biogas (CBG) or biomass gasification as an attractive option for local industrial and mobility applications. Around 17–18 such plants, with a combined capacity of roughly 3,000 TPA are already in operation.

Dr Malhotra underlines the potential of bio-hydrogen combined with Carbon Capture, Utilisation and Storage (CCUS). Where associated carbon dioxide is captured and either stored or converted into long-lived products, these routes could deliver net-negative emissions. He also points to previous Indian experience with Hydrogen–compressed Natural Gas (HCNG) blends, suggesting that modest hydrogen blending in pipelines and vehicle fuels could create incremental demand without major infrastructure changes.

Bhargava emphasises the importance of export-oriented products such as green methanol and Sustainable Aviation Fuel (SAF), produced from biogenic carbon dioxide and green hydrogen. These can align with emerging international sustainability rules and could be supported by contracts-for-difference in Europe or long-term supply arrangements with markets such as Japan and South Korea.

Technical rules and market signals will largely determine the pace and quality of the sector’s growth. Sachin Chugh, Director, Energy and Hydrogen, and Lead, India, Arup notes that while upstream renewables and many downstream uses sit within mature regulatory frameworks, standards for hydrogen production, storage, transport and handling are still evolving.

Chugh identifies three priorities: harmonised national standards aligned with international best practice; clear, trusted pathways for testing and certification with strong private participation; and extensive training and simulation to build institutional capability among regulators, developers and operators.

India’s green hydrogen sector is now shaped less by announcements and more by execution details: who signs long-term offtake, which technologies prove durable and affordable, how transmission and standards are delivered, and how domestic manufacturing is positioned. Decisions taken in this “foundation period” will determine whether green hydrogen becomes a meaningful pillar of India’s net-zero strategy or a more limited, niche solution. The opportunity remains significant, but it will not stay open indefinitely.

This article is adapted from a panel discussion on ‘Hydrogen & Beyond: Unlocking New Frontiers in Clean Energy’ at Powergen India 2025.