India added more than 49 GW of non fossil fuel capacity in 2025, lifting total installed clean power to 266.78 GW, yet the country’s green hydrogen ambitions remain constrained less by generation than by demand certainty.
The Confederation of Indian Industry argues that without mandatory offtake signals, green hydrogen risks remaining a policy aspiration rather than an industrial input, despite the scale up of renewables needed to supply it.
CII’s call for phased green hydrogen mandates targets sectors where hydrogen consumption is already embedded in industrial processes. Refining and fertilizers together account for the bulk of India’s current hydrogen demand, almost entirely supplied by fossil based production. Introducing mandatory blending of green hydrogen into existing grey hydrogen streams would create an immediate, bankable market while avoiding the disruption associated with full process redesigns. The logic mirrors early renewable purchase obligations in the power sector, which accelerated capacity deployment once compliance targets were enforceable.
The economic challenge remains significant. Green hydrogen production costs in India are still materially higher than grey hydrogen, even with declining electrolyzer prices and low cost solar and wind. CII proposes cost offset mechanisms to narrow this gap, including carbon credit allocations, viability gap funding, and cross subsidies such as preferential natural gas pricing for blended use. These measures aim to shift part of the transition cost from early industrial adopters to the broader policy framework, reducing resistance from price sensitive sectors.
Public procurement is positioned as a parallel lever to industrial mandates. A proposed requirement that 10 to 15 percent of steel and cement used in public infrastructure incorporate green hydrogen derived inputs would anchor demand beyond traditional hydrogen consumers. Housing, railways, and transport infrastructure offer scale and long term visibility, two conditions critical for lowering unit costs through standardized production and supply contracts. The approach implicitly recognizes that voluntary green premiums have limited traction in commodity heavy sectors without mandated demand.
Industrial clustering is another pillar of the CII proposal. Concentrating green hydrogen production and consumption in hubs across Gujarat, Maharashtra, Tamil Nadu, and Odisha would allow shared infrastructure for electrolyzers, storage, and transport. For smaller industrial users and MSMEs, aggregation within clusters could reduce delivered hydrogen costs by spreading fixed investments and minimizing logistics. This is particularly relevant for ceramics, glass, and specialty chemicals, where energy costs directly affect global competitiveness.
Export exposure adds urgency to the mandate debate. Indian steel, aluminum, and chemical exporters face rising carbon related trade barriers, most notably the European Union’s Carbon Border Adjustment Mechanism. Without a transition pathway to lower embedded emissions, exporters risk either margin erosion or market loss. Targeted fiscal support for export oriented producers using green hydrogen is framed as a defensive measure to preserve access to premium markets rather than a subsidy for new technology adoption.
CII also emphasizes international alignment. Harmonizing Indian certification standards with global frameworks would reduce transaction friction for green hydrogen and derivative exports such as ammonia and methanol. Granting deemed export status to these products would unlock existing export incentives and improve project bankability. Strategic bilateral agreements with hydrogen importing countries including Germany, Japan, and South Korea are seen as a route to capturing an estimated 5 to 7.5 percent share of future global import demand, assuming India can offer both volume and compliance.
At the core of the proposal is green hydrogen blending as a transition mechanism. By mandating a defined percentage of green hydrogen in existing supply chains, policymakers can create predictable demand without forcing immediate technology overhauls. Over time, higher utilization rates for electrolyzers and supporting infrastructure could compress costs, narrowing the gap with grey hydrogen and reducing the need for fiscal support.
