Indian Council of World Affairs

As India increases domestic clean energy production and lessens its reliance on fossil fuels, its energy transition is about to enter a pivotal stage. This is in line with the goal of becoming a developed country by 2047 and net zero by 2070. The importance of hydrogen in the global energy transition is becoming a cornerstone. It helps to decarbonise sectors that are difficult to abate, like heavy industries, aviation, shipping, and surface transportation. Contrary to electrification, which has restrictions on storage capacity and energy density, hydrogen provides a versatile medium to produce, store, and use in commercial applications. 

India’s need for resources and energy is expected to increase as its growth progresses. Its energy demand has doubled in the last 20 years and is expected to grow another 25 per cent by 2030.[i] Furthermore, this energy demand is met by imports worth over $90 billion, which accounts for 40 per cent of primary energy requirements.[ii] Conventional resources currently account for more than 80 per cent of India’s energy supply, predominantly comprising hydrocarbons.[iii] India currently uses about 5 million metric tonnes of hydrogen annually in several industries, including refining of metals, shipping, aviation, and surface transport. Almost all of this hydrogen is produced from fossil fuels through the process of steam reforming, which is commonly known as grey hydrogen and pollutes the environment significantly.[iv]

Steam reforming is a cost-effective method commonly used for producing hydrogen from fossil fuels. It is a chemical process where natural gas reacts with steam (water vapour) under high pressure to produce hydrogen.[v] For instance, in the presence of a catalyst, an endothermic reaction (absorption of heat) between methane and steam at high temperatures is carried out. However, during this process, greenhouse gas is emitted.

On the contrary, electrolysis is one of the ways to produce green hydrogen. Furthermore, electrolysers and fuel cell reactions require critical minerals to catalyse electrolysis through the steam reforming of natural gas. In a fuel cell, hydrogen electrochemically combines with oxygen to generate energy wherein heat and water result as the only byproducts. This makes fuel cells an effective and clean method to produce electricity without any emissions.

This calls for a shift from traditional methods towards technologies that increase the proportion of renewable energy in the energy portfolio and gradually lessen the need for hydrocarbons in shipping, refining of metals, aviation, transport industries, and commercial applications. Green hydrogen, generated through renewable energy sources, has the potential to lower carbon emissions, given that the electricity used is processed through a clean energy source.

India’s Green Hydrogen Mission

In 2023, the government of India initiated the National Green Hydrogen Mission (NGHM), a programme designed to create a green hydrogen ecosystem. The mission is a strategic route towards industrial competitiveness, reducing import burden (by more than Rs. 1 lakh crore by 2030[vi]) and ensuring long-term energy security. It is not only an energy project linking sustainability with self-reliance but also focuses on enhancing the exports. Through clean energy initiatives, the aim is to become a global hub for the production, utilisation, and transportation of green hydrogen and its derivatives (green ammonia), supporting the Atmanirbhar Bharat vision.

The NGHM’s all-encompassing strategy includes cost-effectiveness, market stimulation, regulatory frameworks, and technological advancement in order to create a sustainable and low-carbon future for the Indian economy. In 2023, an upfront investment of Rs 19,744 crore has been allocated by the government until 2030. This comprises Rs 388 crore for other mission components, Rs 400 crore for R&D (research and development), Rs 1,466 crore for pilot projects, and Rs 17,490 crore for the Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme.[vii] The SIGHT is an incentive programme to support the expansion of the green hydrogen industry value chain and boost the domestic manufacturing of electrolysers.

The main obstacle for industries is to lower the cost of producing green hydrogen while transitioning from grey to green hydrogen. Further, due to high technology costs and potential sunk cost concerns, the adoption of green hydrogen in India is limited. For instance, the cost of producing green hydrogen ranges from $3.5 to 5 per kg, while the breakeven costs for using green hydrogen to replace traditional fuels (hydrocarbons) are less than $2 per kg.[viii] However, a comprehensive strategy that unifies efforts across various sectors is necessary to achieve the mission’s objectives. As a result, the strategy includes interventions for (a) demand creation of domestically produced green hydrogen, making it competitive for both domestic and export markets, (b) using an incentive framework to address supply-side constraints, and (c) creating an enabling ecosystem to facilitate development and scaling.

It is noteworthy that India’s commitment towards green hydrogen was reiterated in the budget 2026–2027, which provided wider policy support rather than significant standalone allocations, reaffirmed India’s commitment to green hydrogen. The focus was on clean energy with an increase in funding for associated industries, as mentioned above. Resultantly, capital goods required for electrolysers and renewable energy production are exempt from customs duties to boost domestic supply chains, reduce production costs, and support hydrogen value chains.

This shift entails a number of initiatives, first, replacing fossil fuel-derived hydrogen with green hydrogen in the processes of producing ammonia and refining petroleum. For instance, in petroleum refineries, the hydrogen is used in desulphurisation (removing sulphur from fuels) and hydrocracking (converting hydrocarbons into lighter and simpler forms). Second, incorporating green hydrogen into the city gas distribution system. Third, replace fossil fuels in a number of industries, such as shipping, refining of metals, aviation, and surface transport, with fuel made from green hydrogen. The implementation strategy for the mission is designed to take into account the industry’s dynamic nature and its early stages of development. The mission also seeks to create an ecosystem that promotes research and development, sets rules, and launches pilot projects.

Becoming a Global Hydrogen Hub

The market for green hydrogen and its derivatives is expected to increase as global consensus moves towards net zero. International trade of green hydrogen and its derivatives (green ammonia) is likely to arise from the disparities in anticipated demand and supply of green hydrogen in various nations and regions. The transition from fossil fuels to green fuels has been accelerated by ecological concerns, supply chain disruptions, and the susceptibility of fossil fuels to global turmoil. India now has an opportunity to become a major producer and transit hub of green hydrogen and its derivatives.

Interestingly, some nations, like the EU, South Korea, Japan, etc., have declared their plans to import green hydrogen and its derivatives in order to achieve their climate commitments. For instance, the EU plans to import 10 million tonnes of green hydrogen by 2030.[ix]

Table 1: India’s partnership with various nations in green hydrogen

(Source: Author’s compilation)

Way Forward

Today, India stands at the forefront of the global green hydrogen economy. Numerous Indian companies are actively engaging in establishing green hydrogen projects. Notably, the Ministry of New and Renewable Energy has specified three ports [Paradip Port Authority (Odisha), V.O. Chidambaranar Port Authority (Tamil Nadu), and Deendayal Port Authority (Gujarat)] as green hydrogen hubs. In the future, these ports will serve as integrated transit hubs for future export, consumption, and production. Furthermore, India’s foreign partnership is essential to achieve its net zero goals. These collaborations can improve regional supply chains and facilitate hydrogen trade.

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*Anchal Garg, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal. 

Endnotes 

[i] https://www.iea.org/reports/india-energy-outlook-2021(NITI Aayog and International Energy Agency, India Vision Scenario)

[ii] National Green Hydrogen Mission Document, https://cdnbbsr.s3waas.gov.in/s3716e1b8c6cd17b771da77391355749f3/uploads/2023/01/2023012338.pdf

[iii] Singh, Amit Pratap. "Assessment of India's Green Hydrogen Mission and environmental impact." Renewable and Sustainable Energy Reviews 203 (2024): 114758.

[iv] Birol F. The future of hydrogen: seizing today's opportunities, vol. 20. IEA Report prepared for the G; 2019. p. 442.

[v] SFC Energy, https://www.sfc.com/glossary/steam-reforming/

[vi]Press Information Bureau 2025, https://www.pib.gov.in/PressNoteDetails.aspx?id=155990&NoteId=155990&ModuleId=3®=3&lang=2

[vii] Press Information Bureau 2025, https://www.pib.gov.in/PressNoteDetails.aspx?id=155990&NoteId=155990&ModuleId=3®=3&lang=2

[viii] https://www.ceew.in/publications/how-can-indian-policymakers-boost-investments-for-domestic-green-hydrogen-financing

[ix] European Union, https://energy.ec.europa.eu/topics/eus-energy-system/hydrogen_en

[x] Press Information Bureau 2023, https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1939795®=3&lang=2

[xi] Press Information Bureau 2024, https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=1998871®=3&lang=2#:~:text=Indian%20Renewable%20Energy%20company%20%2D%20ACME,Ammonia%20from%20India%20to%20Japan

[xii] Press Information Bureau 2025, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189126®=3&lang=2#:~:text=Building%20Global%20Partnerships,for%20production%2C%20storage%20and%20exports.

[xiii] Press Information Bureau 2025, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189126®=3&lang=2#:~:text=Building%20Global%20Partnerships,for%20production%2C%20storage%20and%20exports

[xiv] Australian Government (Department of climate change, energy, the environment and water), https://www.dcceew.gov.au/climate-change/international-climate-action/international-partnerships/india-australia-green-hydrogen-taskforce

[xv] Press Information Bureau 2025, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189126®=3&lang=2#:~:text=Building%20Global%20Partnerships,for%20production%2C%20storage%20and%20exports

[xvi] Ministry of External Affairs 2026, https://www.mea.gov.in/bilateral-documents.htm?dtl/40711/India++Malaysia+Joint+Statement+on+the+occasion+of+the+Official+visit+by+Prime+minister+of+India+to+Malaysia+February+08+2026