Greening mandates backed by incentives crucial to spur green hydrogen demand
New Delhi, January 14, 2026: The Confederation of India Industry has urged the government to introduce Green Hydrogen Mandates to spur demand, and enable a vibrant green hydrogen economy. The proposed Green Hydrogen Blending could be introduced for sectors like refining, fertiliser and natural gas with cost-offset mechanisms.
The sectors that use grey hydrogen extensively are best positioned to pioneer large-scale demand for green hydrogen. 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.
The mandates could be phased and be accompanied by cost-offset mechanisms such as carbon credit allocations for emissions saved, cross subsidies (particularly in the fertilizer industry, by offering cheaper natural gas if blended with green hydrogen), and viability gap funding to reduce the burden on consumers and industry.
According to Mr Chandrajit Banerjee, Director General CII , 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. 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.
Significant demand could be created if 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. It will allow aggregation of demand from smaller users (for example, MSMEs in ceramics, glass, and chemicals) who currently face high grey hydrogen costs. They can also enable infrastructure cost sharing, improve logistics efficiency, and attract anchor industries and investors fostering local employment and industrial growth around green hydrogen hubs.
The Government could support such clusters through land and capital provisioning, common-use infrastructure (like pipelines, storage, CO2 transport), renewable energy linkages, and cluster-specific incentives. These could be focused in high-potential regions like Gujarat, Maharashtra, Tamil Nadu, and Odisha through Public Private Partnerships (PPPs).
For enabling export demand, bilateral agreements and trade facilitation are important. The government should seek to position India as a global green hydrogen supplier. via bilateral agreements with key importing countries. Capturing 5–7.5 per cent of projected global import demand would effectively translate into an export demand for 0.8-1.1 MMT of annual green hydrogen demand. This can help establish India’s export competitiveness in a fast-growing market.
Bilateral trade agreements with key importing countries such as Germany, Netherlands, Japan, and South Korea would be important to promoting exports. Alongside, harmonization of Indian certification standards with international frameworks and simplification of trade documentation would be required.
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.
A rapid shift to green steel and ammonia in export-oriented sectors is required to preserve India’s access to premium markets and catalyse domestic green hydrogen demand, improving cost-efficiency and value chain maturity.
For this, it will be important to devise targeted transition support to steel and chemical exporters for green hydrogen integration to protect export competitiveness in carbon-sensitive markets, especially the EU under the Carbon Border Adjustment Mechanism (CBAM).
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.