India is increasingly positioning itself as a leader in green hydrogen—a key pillar of the country’s sustainable energy future. With abundant renewable energy resources and the growing demand for cleaner alternatives, India has the potential to transform its energy landscape, significantly contributing to global net-zero goals.

A recent roundtable on Unlocking Opportunities in Green Molecules, hosted by PETRONAS and Gentari during the India Energy Week, underscored the importance of industry collaboration, regulatory clarity, and robust financial frameworks in scaling hydrogen adoption. The discussions have set the stage for accelerating the country’s transition to green hydrogen, particularly in industries such as transportation, steel production, and power generation.

India’s Renewable Energy Foundation for Green Hydrogen

India has made significant strides in its renewable energy journey. By October 2024, the country surpassed 200 GW in total renewable energy capacity, which includes 90 GW of installed solar capacity. This growing renewable energy base provides a solid foundation for scaling green hydrogen production, as hydrogen production requires large amounts of renewable electricity, especially for electrolysis.

The roundtable highlighted that India’s shift from renewable energy capacity to a hydrogen economy hinges on substantial investments in large-scale infrastructure. This involves developing hydrogen production facilities, storage solutions, pipelines, and transportation networks—all essential components of a sustainable hydrogen ecosystem.

Policy Clarity and Market Stability

For India to become a global leader in green hydrogen, there needs to be clear policy frameworks that enable industry-wide adoption. At the heart of the discussion was the need for hydrogen obligations and policies that aggregate domestic demand. These steps could drive industrial adoption, even beyond government incentives.

Long-term hydrogen off-take agreements would create a stable market, ensuring that hydrogen producers can secure buyers for their products, which in turn would help reduce volatility in the sector. Moreover, the development of a structured hydrogen pricing framework and carbon credit mechanisms would improve the commercial viability of hydrogen projects and provide the financial incentive needed for scaling up production.

The roundtable also called for regulatory frameworks addressing safety standards, logistics, and transportation of hydrogen. The establishment of clear safety protocols is critical to facilitating widespread hydrogen adoption across sectors like transportation and heavy industry.

Challenges: Cost and Infrastructure

Despite its immense potential, the cost of producing green hydrogen remains a significant barrier to widespread adoption. The current production cost of green hydrogen is estimated to be between Rs. 253-337 per kg (approximately US$ 3-4 per kg). This is considerably higher than hydrogen produced from fossil fuels, which impacts the sector's competitiveness.

In the roundtable discussions, participants emphasized the importance of innovative financial models to de-risk investments in hydrogen projects. Public-private partnerships, blended finance mechanisms, and credit guarantees—such as those introduced in India’s 2025 budget—are vital to lowering the risks for investors. The first-loss guarantee structure could also play a crucial role in securing investment by providing further confidence to stakeholders.

Furthermore, financial access needs to be improved, especially in areas like off-take commitments and the stability of renewable power that underpins green hydrogen production. As global investors show increasing interest in ESG-aligned investments, India has the opportunity to attract institutional capital into the hydrogen sector, provided these financial risks can be mitigated.

Hydrogen Infrastructure Development and Manufacturing

One of the key areas requiring immediate attention is infrastructure. The transportation and storage networks, along with port facilities, need significant investments to handle large-scale hydrogen production and distribution. India must also focus on creating an integrated supply chain for hydrogen, including pipelines and storage facilities that can support interstate transport.

In terms of manufacturing, India has the potential to become a major player in the electrolyser market. Electrolysers are essential for producing green hydrogen, and incentivizing domestic manufacturing can significantly reduce the dependence on imports. The government could consider measures like import restrictions on electrolyser parts to stimulate local production and meet the growing demand for green hydrogen.

Global Competitiveness and Policy Initiatives

India is not alone in its pursuit of green hydrogen, with countries like Germany, Japan, and Australia also vying for leadership in this sector. However, India’s proactive policy initiatives and strategic partnerships position it as a strong contender in the global green hydrogen race.

The AM Green Kakinada project, which recently reached the Final Investment Decision (FID), marks a significant step forward in hydrogen production. This project will serve as a blueprint for scaling green hydrogen infrastructure and production in the country.

The roundtable participants also highlighted the global trade opportunities for India as a hydrogen exporter, noting that demand for hydrogen could surge in regions such as Europe and East Asia. By positioning itself as a leader in hydrogen production, India can not only meet its own energy needs but also become a major supplier to international markets.

Future Outlook: Collaboration and Scaling Up

The pathway to scaling up green hydrogen production in India is clear, but it will require continued collaboration between industry stakeholders, government agencies, and financial institutions. By focusing on strategic partnerships, securing long-term off-take agreements, and ensuring financial viability, India can build a competitive and sustainable hydrogen market.

With the right policies and financial strategies, India can establish itself as a global leader in the hydrogen economy, driving Asia’s energy transition and contributing to the global net-zero targets.

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