India can potentially capture 10 per cent of the global green hydrogen market by addressing economic and infrastructural challenges.
The country needs to redirect financial benefits away from fossil fuels to clean energy technologies to boost domestic adoption.
India has earmarked Rs 208 crore for five pilot green hydrogen projects.
The government should introduce a green hydrogen procurement mandate for industries to create reliable demand.
India holds several strategic advantages to potentially capture 10 per cent of the global green hydrogen market, exporting around 10 million tonnes annually to economies such as the European Union, Japan and South Korea. But to do so, the country needs to address key economic and infrastructural challenges that hinder hydrogen adoption domestically.
Phasing out incentives for carbon-intensive energy sources could be one of the solutions, according to the report India’s green hydrogen ecosystem released on August 19, 2025.
The global green hydrogen market, valued at $8.78 billion in 2024, is projected to reach $199.22 billion by 2034, growing at a compound annual growth rate (CAGR) of 41.46 per cent. India's green hydrogen market is expected to reach $2,812.8 million by 2030, representing a remarkable 56 per cent CAGR from 2024 to 2030.
Green hydrogen, hydrogen gas produced through a process called electrolysis, where renewable energy is used to split water into hydrogen and oxygen, is crucial for a sustainable energy future because of its potential to significantly reduce greenhouse gas emissions and dependence on fossil fuels. It has a wide range of applications across sectors like steel, mobility, fertiliser and shipping.
To boost green hydrogen adoption, Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young (EY), who jointly developed the report, called for redirecting financial benefits away from fossil fuels to clean energy tech. “Systematically, reallocate existing subsidies and financial support away from fossil fuels and other high-emission energy technologies, directing these resources towards renewable energy initiatives,” the report said.
Additionally, implementing a comprehensive carbon pricing mechanism, such as a carbon tax, can be considered to internalise the environmental costs of carbon emissions. This could enhance the economic viability of green hydrogen by creating a more level playing field relative to conventional, carbon-intensive alternatives, it added.
The authors of the report suggested ways to advance green hydrogen offtake among industrial sectors and highlights the sectoral opportunities, industrial demand and multi-pronged regulatory and industrial approach needed for increasing green hydrogen adoption in the country.
With an outlay of Rs 19,744 crore, the Indian government approved the national green hydrogen mission in January 2023. India’s Green Hydrogen production capacity is aimed at achieving at least 5 million tonnes (MMT) per annum by 2030.
“Scaling up to support 5 MMT per year of Green Hydrogen by 2030 will require an additional 125 gigawatt (GW) of dedicated renewable capacity, alongside robust water logistics and domestic electrolyser manufacturing capabilities,” said Somesh Kumar, partner and leader, power & utilities at EY India.
The report outlined that early-stage green hydrogen projects face elevated cost structures, typically around double the cost of grey hydrogen, driven by transmission, efficiency and capex gaps.
Addressing these barriers calls for an integrated strategy: Supportive fiscal and open-access regimes, demand aggregation mechanisms such as purchase obligations, and export-linked trade corridors, Kumar said.
The cost to produce green hydrogen in India is expected to reduce to $3-3.75 per kg by 2030 from the current $4-4.5 per kg due to cheap renewable electricity provided to manufacturers, waiver of inter-state transmission charges for open access, reduced GST rate of 5 per cent for hydrogen and electrolyser manufacturing cost reduction of 7-8 per cent in the next five years.
India has initiated five pilot projects under the National Green Hydrogen Mission for transportation, deploying 37 hydrogen-powered vehicles (15 fuel cell-based and 22 hydrogen internal combustion engine-based) across 10 routes. The government allocated Rs 208 crore for these pilot projects, which include nine hydrogen refuelling stations that are expected to be operational within 18-24 months.
The report also suggested establishing regulatory policies that encourage industrial sectors to procure a defined percentage of their total energy consumption from green hydrogen. “This will create predictable and sustained demand, thereby incentivising investments in green hydrogen production and infrastructure,” it said.
The other recommendations include structured demand aggregation, supported by a payment security mechanism, for competitive prices and bankable offtake contracts to evolve into a recurring, pragmatic process rather than a series of isolated transactions.
The report urged the governments to establish robust regulatory frameworks, fiscal incentives and foundational infrastructure. “Industry participation, from startups to multinational corporations, is essential to drive innovation, capital deployment, and market expansion. Researchers play a critical role in advancing the technology and knowledge essential for sustainable hydrogen solutions,” it said.