EY – Investment opportunities in India’s Green Hydrogen sector
- India aims to produce 5 MMT of Green Hydrogen annually by 2030, backed by INR19,744 crore investment, with prices expected to fall to INR260-310/kg, boosting industrial use and exports.
- Sectoral demand projected to surge, led by aviation and steel; strong export potential to EU, Japan and South Korea.
- Scaling adoption requires policy alignment, demand mandates and major infrastructure investment.
India’s National Green Hydrogen Mission (NGHM), launched in January 2023 with an outlay of INR19,744 crore (US$2.4 billion), sets a bold target for Green Hydrogen production of 5 million metric tons (MMT) annually by 2030. The mission aims to mobilize over INR8 lakh crore (US$91.95 billion) in green energy investments, create 500,000 jobs, cut fossil fuel imports by INR1 lakh crore annually, and abate 50 MMT of CO₂ emissions.
Strategic advantages and market potential
India benefits from some of the world’s lowest renewable hydrogen sources, high solar irradiance and a unified transmission grid. These factors are expected to reduce the levelized cost of Green Hydrogen to INR260 to 310/kg (US$3–3.7/kg) by 2030, which could boost hydrogen market growth domestically and internationally. Global market growth, from US$8.8 billion in 2024 to US$199 billion by 2034, positions India as a major exporter to the EU, Japan and South Korea.
Sectoral opportunities
Hydrogen demand in India is projected to rise significantly across key sectors between 2030 and 2050, in line with the nation’s renewable energy transition and carbon-neutral goals. In 2030, the estimated demand is distributed among fertilizers (5.47 MMT), refineries (7.12 MMT), steel (5.67 MMT) and aviation (0.74 MMT). By 2050, a major shift is anticipated, particularly in the aviation sector, where demand is expected to surge to 148.85 MMT—making it the largest hydrogen-consuming sector, assuming a 2% Green Hydrogen blending mandate is maintained through 2050. The steel sector is projected to see demand rise to 30.27 MMT, driven by carbon emission reduction efforts. Refinery demand is expected to grow modestly to 8.54 MMT, while fertilizer sector demand is projected to nearly double, rising to 10.11 MMT by 2050.
Pilot projects in steel manufacturing, hydrogen mobility and maritime sectors—backed by the SIGHT programme—are accelerating the hydrogen supply chain and hydrogen infrastructure development across the country.
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Challenges to overcome
Key barriers include high production costs compared to grey hydrogen, limited transport and storage infrastructure, water availability constraints and dependence on imported critical minerals for electrolyser manufacturing. Market uptake is hindered by insufficient demand, fragmented global standards and public safety concerns. Addressing these will be key for Green Hydrogen systems to achieve scale.
Policy and state initiatives
NGHM’s multi-pronged approach includes Green Hydrogen systems production-linked incentives, pilot projects, R&D, skill development and hydrogen hubs. Several states, inter alia, Uttar Pradesh, Maharashtra, Rajasthan, Andhra Pradesh, Odisha and others have introduced capital subsidies, tax waivers, and priority access to infrastructure to attract investment opportunities in India’s Green Hydrogen sector.
Recommendations for increasing GH2 offtake in India
The momentum for adopting Green Hydrogen is gaining traction, driven by competitive pricing in critical sectors such as refining and fertilizers, supportive policy frameworks and increasing global demand for hydrogen derivatives like green methanol. To facilitate large-scale deployment, it is crucial to align national policies to mandate the use of clean hydrogen, eliminate fossil fuel subsidies, and implement obligations for the consumption of hydrogen and its derivatives. Key enablers include mechanisms for demand aggregation supported by payment security, a national certification and tracking system, the development of hydrogen hubs and port infrastructure, integration into city gas distribution networks and risk mitigation strategies for offtakers. When these elements are combined with industry innovation and targeted financial incentives, they can help create a stable and bankable market for Green Hydrogen applications. This will enhance climate action, bolster energy resilience, and solidify India’s position in the future of hydrogen fuel cells in transportation and the broader global hydrogen economy.
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EY – Investment opportunities in India’s Green Hydrogen sector, source
