The Confederation of Indian Industry (CII) is pressing the government to establish clear mandates for green hydrogen production and consumption, coupled with robust incentives. This push, ahead of Budget 2026, aims to accelerate demand creation and support India’s strategic shift towards a decarbonized industrial sector.
CII highlighted that sectors like refining, fertilisers, and natural gas, which currently rely heavily on grey hydrogen, are prime candidates to anchor large-scale green hydrogen adoption. The key, however, lies in addressing the significant cost differential between the two through targeted policy interventions.
Bridging the Cost Gap
To overcome this economic barrier, CII proposed implementing ‘greening mandates’ that would provide producers with crucial certainty. These mandates, backed by incentives, are expected to drive economies of scale, leading to faster cost reductions.
Suggested incentive mechanisms include phased blending mandates across various sectors. These could be supported by cost-offsetting tools like carbon credit allocations for verified emissions reductions. Additionally, cross-subsidies, such as offering cheaper natural gas when blended with green hydrogen in the fertiliser sector, and viability gap funding were recommended to ease the financial burden on both industry and consumers.
Public Procurement as a Demand Driver
Public procurement represents a significant, untapped channel for scaling up green hydrogen adoption, according to CII. Large public infrastructure projects, spanning housing, railways, ports, and bridges, offer a ready market for green hydrogen derivatives.
Mandating green procurement for these projects would establish predictable offtake, reduce unit costs through increased scale, and de-risk investments for producers by guaranteeing demand. CII estimated that mandating the sourcing of 10-15% of materials like steel, ammonia, and cement for public projects from green hydrogen-based production could unlock substantial demand.
Building Momentum and Global Reach
CII Director General Chandrajit Banerjee noted India’s strong momentum in clean energy expansion, with non-fossil fuel installed capacity reaching 266.78 GW in 2025, a 22.6% year-on-year increase. He stressed that further development hinges on promoting technologies like green hydrogen.
The industry body also advocated for the establishment of industrial green hydrogen clusters with shared infrastructure to aggregate demand, making it viable for smaller users, including MSMEs in ceramics, glass, and chemicals, to access the cleaner fuel. For export markets, CII called for bilateral agreements with key importers like Germany, Japan, and South Korea, alongside harmonisation of Indian certification standards with global frameworks. Granting ‘deemed export’ status to green hydrogen and developing financial instruments to attract private capital were also suggested.
