India’s target of 5 million metric tonnes of green hydrogen production annually by 2030 would exceed the current global market by a factor of five, highlighting both the scale of ambition and the execution gap facing the sector.
Backed by approximately $2.1 billion in subsidies under its National Green Hydrogen Mission, the country is attempting to compress cost curves and accelerate deployment at a pace that contrasts sharply with more cautious policy signals emerging from Western markets.
The global context is increasingly defined by a divergence in strategy. While European and US hydrogen programs have slowed amid persistent cost challenges, India and China are advancing through state backed mechanisms designed to align supply with guaranteed demand. According to Rystad Energy data, China invested $3.7 billion in hydrogen in 2025 alone, more than double US levels, and is already approaching cost parity with fossil based hydrogen in select regions.
India’s approach is anchored in competitive reverse auctions, which have reduced green hydrogen production costs from around $5 per kilogram at the launch of the mission in 2023 to approximately $3 per kilogram today. Government projections suggest further declines to $2 per kilogram by 2032, though this trajectory depends on continued reductions in electrolyzer costs, renewable power pricing, and financing conditions. As of early 2026, only about 8,000 tonnes per year of production capacity has been commissioned, underscoring the scale of the ramp required to meet the 2030 target.
Demand side coordination has emerged as a central differentiator. India has secured offtake agreements for 724,000 tonnes per year of green ammonia, largely through state linked fertiliser producers and refiners. This structure addresses one of the core failures of earlier hydrogen strategies, where production capacity outpaced credible demand signals. By contrast, many Western projects have struggled to reach final investment decisions due to uncertainty around long term buyers.
China’s model follows a different but equally coordinated path, driven by centralized industrial policy. The country’s largest project, a $2 billion development in Inner Mongolia, is already exporting green ammonia to South Korea, signaling early integration into international trade flows. Rystad Energy projects Chinese capacity could reach 2.6 million tonnes annually by 2031, supported by its classification of hydrogen as a frontier industry in its latest five year plan. In regions with high renewable resource availability, reported production costs have fallen to around $2 per kilogram, narrowing the gap with coal based hydrogen.
The cost trajectory remains the critical variable shaping competitiveness. Green hydrogen’s viability in hard to abate sectors such as steel, fertilizers, and shipping depends on narrowing the price differential with conventional hydrogen derived from natural gas or coal. While India’s auction mechanism has demonstrated early progress, sustaining cost reductions will require scaling electrolyzer manufacturing, expanding renewable capacity, and reducing balance of plant costs, all while maintaining high utilization rates.
At the corporate level, the implications vary significantly across the value chain. Larsen & Toubro is positioned as an engineering and procurement enabler, with exposure tied to capital expenditure cycles rather than commodity price risk. Its growth is contingent on project execution rather than hydrogen price realization, making it more sensitive to investment timelines than to market demand fluctuations.
Bharat Petroleum Corporation Limited benefits from embedded demand through its refining operations, where hydrogen is already a critical input. Its deployment of electrolyzers at Kochi and Bina illustrates a vertically integrated model in which production is directly linked to consumption, reducing market risk but limiting exposure to external hydrogen markets.
GAIL Limited represents the infrastructure layer, with its 22,000 kilometer pipeline network providing a potential backbone for hydrogen transport and blending. However, large scale hydrogen transport introduces technical challenges related to material compatibility and leakage, which will require incremental upgrades rather than immediate system wide conversion.
JSW Steel, through its energy arm, has begun integrating green hydrogen into steel production with a 3,800 tonne per year project. While this marks early commercialization, the volumes remain marginal relative to overall steel output, reflecting the broader challenge of scaling hydrogen use in energy intensive industries.
Despite policy momentum, the gap between current capacity and stated targets remains substantial. Moving from 8,000 tonnes per year to 5 million tonnes within the decade implies exponential growth across production, infrastructure, and end use integration. Analysts have noted that most projects remain at pilot or early commissioning stages, with investment horizons extending beyond five years.
