India’s green hydrogen sector is showing signs of gaining momentum, driven by government incentives, competitive project auctions and rising investor interest. However, industry experts believe the country is unlikely to achieve its target of producing 5 million tonnes per annum (MTPA) of green hydrogen by 2030 unless project execution accelerates significantly.
India currently has less than 10,000 tonnes per annum of operational green hydrogen capacity, with most projects still at the pilot or demonstration stage. The government launched the National Green Hydrogen Mission (NGHM) in 2023 with a target of producing 5 MTPA by 2030 to help decarbonise sectors such as oil refining, fertilisers and steel, Business Standard reported.
According to a report by SBI Capital Markets, the 1.2 MTPA of production capacity auctioned under the Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme currently represents the upper limit of likely production by 2030 unless the pace of auctions increases sharply over the next year.
The Rs 17,490-crore SIGHT programme provides financial incentives for domestic electrolyser manufacturing and green hydrogen production. Industry estimates suggest the scheme could support around 2.7 MTPA of production capacity, including an additional 1.5 MTPA over the next four years.
Apart from financial support, the government has offered inter-state transmission system (ISTS) charge waivers, benefits under the Special Economic Zones Act and selected exemptions from domestic sourcing requirements under the Approved List of Models and Manufacturers (ALMM) framework.
Despite these incentives, project execution remains slow. As of August 2025, India had 158 green hydrogen projects at various stages of development. Around 94% of the planned capacity was still at the announcement stage, only 0.1% was under construction and just 2.8% had become operational.
Industry experts attribute the delays to the adoption of new technologies, long equipment procurement timelines, renewable energy project delays and the absence of firm demand commitments.
Charith Konda, Lead Energy Specialist at the Institute for Energy Economics and Financial Analysis (IEEFA), said the biggest barriers remain uncertain demand, high production costs, lack of common definitions and inadequate infrastructure for storage, transport and distribution.
Several states are attempting to attract investment by introducing green hydrogen policies. At least 15 states have announced dedicated policies, while another eight are preparing similar frameworks. States such as Odisha, Kerala and Andhra Pradesh are also promoting export-oriented green hydrogen hubs, anticipating both domestic demand and export opportunities in East Asia.
Investor confidence has also improved following recent SIGHT auctions. Under the first tranche of SIGHT Component 2, the government awarded firm demand contracts for 724 kilotonnes per annum of green ammonia capacity across 13 projects. All winning bids were below the reserve price, with the lowest discovered price at Rs 52 per kg after incentives, making it one of the most competitive green ammonia prices globally.
For green hydrogen supply under the SIGHT Mode 2B auctions, competitive bidding has pushed prices down by 17% over the past year to Rs 279 per kg, according to SBI Capital Markets. The report said additional tenders under this category could further expand production.
Industry executives said India’s policy framework is drawing international attention because of its structured incentives and competitive price discovery. They believe the programme provides a strong foundation for scaling up the sector over the coming years.
Experts, however, said three critical issues must be addressed to unlock large-scale investment. These include creating assured demand through aggregated procurement, developing common infrastructure such as green hydrogen hubs at ports and industrial clusters, and improving production economics through market-based mechanisms such as carbon pricing or carbon credits that narrow the cost gap with conventional grey hydrogen.
SBI Capital Markets said oil refining currently offers the strongest commercial case for green hydrogen adoption, followed by ammonia production for fertilisers. As carbon pricing mechanisms evolve, green hydrogen is expected to become viable for other hard-to-abate industries, including steel and heavy manufacturing.
