CII urges govt to issue directives, incentives to fuel India's green hydrogen aspirations

New Delhi, Jan 14 (PTI) Industry lobby CII has urged the government to issue green hydrogen mandates backed by incentives to spur demand and enable a vibrant clean economy. The Confederation of Indian Industry (CII) suggested that the proposed Green Hydrogen Blending could be introduced for various sectors, like refining, fertiliser and natural gas, with cost-offset mechanisms.

The sectors that use grey hydrogen extensively are best positioned to fuel large-scale demand. However, the cost gap between green and grey hydrogen remains substantial.

"Greening mandates backed by incentives would help overcome this economic barrier, providing certainty to producers and enabling faster cost declines through economies of scale," said CII.

It suggested that the mandates could be phased and accompanied by cost-offset mechanisms, such as carbon credit allocations for emissions saved, cross-subsidies (particularly in the fertiliser industry, by offering cheaper natural gas if blended with green hydrogen), and viability gap funding to reduce the burden on consumers and industry.

CII Director General Chandrajit Banerjee said India should take the next leap in promoting green technologies after it marked a record-breaking year in its clean energy journey in 2025, with non-fossil fuel installed capacity rising to 266.78 GW.

"While this represented a 22.6 per cent increase over 2024, with 49.12 GW of new non-fossil capacity being added over 217.62 GW in 2024, the next level of development will come with important technologies like green hydrogen being promoted," he said.

Public procurement of green hydrogen-embedded products could also be encouraged, CII said.

For instance, public infrastructure, such as housing, railways, ports, and bridges, represents a significant channel to boost demand for green hydrogen derivatives. Mandating green procurement would establish predictable, anchored demand, lower green product prices through scale, and de-risk investments by giving producers bankable offtake commitments, argued the industry lobby.

According to CII, significant demand could be created if the public procurement mandate of 10-15 per cent of infrastructure-related materials (such as steel, ammonia, and cement) for public projects could be from green hydrogen-based production units.

Developing industrial green hydrogen clusters with shared infrastructure and demand aggregation would also be a key enabler, as it will allow aggregation of demand from smaller users (for example, MSMEs in ceramics, glass, and chemicals), who currently face high grey hydrogen costs, the industry lobby said.

To enable export demand, bilateral agreements and trade facilitation are important, it stated.

"Bilateral trade agreements with key importing countries such as Germany, the Netherlands, Japan, and South Korea would be important to promoting exports. Alongside, harmonisation of Indian certification standards with international frameworks and simplification of trade documentation would be required," CII said.

Green hydrogen and its derivatives could be given "deemed export" status. This would make them eligible for financial benefits under the existing export promotion schemes, it observed.

Besides, to attract private investment into early-stage green hydrogen projects, the government should consider developing financial instruments that would make India's green hydrogen ventures globally competitive. PTI RSN BAL BAL