India’s Green Hydrogen Cost May Drop 40 Per Cent

12 Jun 2025 CW Team

India is actively promoting the green hydrogen sector by offering low-cost renewable power to manufacturers, waiving Inter-State Transmission Charges for open access, and reducing both distribution and transmission fees. Additionally, the Goods and Services Tax (GST) on hydrogen has been lowered to 5 per cent.

Electrolyser manufacturers are expected to achieve a 7 to 10 per cent reduction in system costs over the initial five-year period starting in 2024. The average annual realisable base incentive is estimated at Rs 2.96 million per megawatt (USD 36,000/MW), enhancing the viability of local manufacturing.

India launched the National Green Hydrogen Mission in January 2023, backed by an allocation of Rs 197.44 billion (USD 2.4 billion). The mission targets the creation of 5 million tonnes of green hydrogen production capacity annually by 2030 and features two financial incentive mechanisms — one supporting domestic electrolyser production and the other promoting green hydrogen output.

While the IEEFA report recognises the mission as a major policy breakthrough, it also calls for refinements to improve long-term investment prospects and competitiveness. Suggestions include greater focus on attracting start-ups, securing consistent demand, and strengthening supply chains to ensure industry sustainability.

The industry has shown strong enthusiasm, and successful implementation could benefit multiple sectors, including agriculture, transport, and manufacturing, the report added.

India’s broader energy vision aligns with its international commitments. At the COP26 summit in 2021, India pledged to achieve 500 GW of non-fossil energy capacity, meet half of its energy demand from renewables, cut emissions by 1 billion tonnes, reduce emissions intensity of GDP by 45 per cent, and achieve net-zero carbon emissions by 2070.

With these targets and the green hydrogen initiative, India aims to reduce fossil fuel dependence while advancing a sustainable, climate-resilient economy.

The cost of green hydrogen in India is projected to decline by up to 40 per cent, driven by extensive government support and incentives, according to a report from the Institute for Energy Economics and Financial Analysis (IEEFA). With current policy support, the levelised cost of green hydrogen is expected to fall to Rs 260–310 per kg (approximately USD 3–3.75 per kg).India is actively promoting the green hydrogen sector by offering low-cost renewable power to manufacturers, waiving Inter-State Transmission Charges for open access, and reducing both distribution and transmission fees. Additionally, the Goods and Services Tax (GST) on hydrogen has been lowered to 5 per cent.Electrolyser manufacturers are expected to achieve a 7 to 10 per cent reduction in system costs over the initial five-year period starting in 2024. The average annual realisable base incentive is estimated at Rs 2.96 million per megawatt (USD 36,000/MW), enhancing the viability of local manufacturing.India launched the National Green Hydrogen Mission in January 2023, backed by an allocation of Rs 197.44 billion (USD 2.4 billion). The mission targets the creation of 5 million tonnes of green hydrogen production capacity annually by 2030 and features two financial incentive mechanisms — one supporting domestic electrolyser production and the other promoting green hydrogen output.While the IEEFA report recognises the mission as a major policy breakthrough, it also calls for refinements to improve long-term investment prospects and competitiveness. Suggestions include greater focus on attracting start-ups, securing consistent demand, and strengthening supply chains to ensure industry sustainability.The industry has shown strong enthusiasm, and successful implementation could benefit multiple sectors, including agriculture, transport, and manufacturing, the report added.India’s broader energy vision aligns with its international commitments. At the COP26 summit in 2021, India pledged to achieve 500 GW of non-fossil energy capacity, meet half of its energy demand from renewables, cut emissions by 1 billion tonnes, reduce emissions intensity of GDP by 45 per cent, and achieve net-zero carbon emissions by 2070.With these targets and the green hydrogen initiative, India aims to reduce fossil fuel dependence while advancing a sustainable, climate-resilient economy.

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