India Considers Tax Incentives to Boost Green Hydrogen Production
Key Ideas
- The Indian government is contemplating lowering tariffs on essential machinery for green hydrogen production to boost the country's green energy goals.
- Tax incentives, such as reducing import duties and GST on green hydrogen and green ammonia, are being considered for fuel produced for export purposes.
- India aims to increase its green hydrogen production from near zero to five million tons by 2030 with the intention to become a significant global supplier.
- To address challenges in scaling technology and reducing costs, the finance ministry is exploring the possibility of classifying green hydrogen projects for preferential funding terms.
The Indian government is exploring various measures to promote green hydrogen production as part of its green energy objectives. These measures include considering lowering tariffs on machinery essential for green hydrogen production and contemplating tax incentives like reducing import duties and GST on green hydrogen and green ammonia. The aim is to encourage fuel production for export, not for domestic use. Green hydrogen is seen as essential for India's plan to decarbonize major industries like refineries and steel mills, with a target to increase production significantly by 2030. Despite growing interest, challenges remain in scaling technology and reducing costs. To further support the sector, the finance ministry is looking into designating green hydrogen as part of infrastructure sectors eligible for preferential funding terms, potentially providing additional financial support for green hydrogen projects.