India Considers Tariff Cuts to Boost Green Hydrogen Production
Key Ideas
  • India is contemplating tariff reductions on machinery imports to facilitate green hydrogen production, aiming to become a key player in the green fuel industry.
  • The government is discussing exempting certain equipment from import taxes and lowering the goods and services tax on green hydrogen, targeting a production goal of 5 million tons by 2030.
  • Proposed investments in green hydrogen production in India amount to approximately $187 billion, with export agreements focusing on Europe and Japan, backed by endorsements from prominent billionaires.
  • To address challenges in technology scaling, cost reduction, and demand creation, potential measures include easier funding access for green hydrogen projects as part of infrastructure development initiatives.
India is exploring options to reduce tariffs on machinery essential for the production of green hydrogen, aligning with its ambition to establish itself as a significant player in the green fuel market. Prime Minister Narendra Modi's administration is deliberating plans to eliminate certain import duties and lessen the tax burden on green hydrogen, currently set at 12%. The proposed changes target both green hydrogen and green ammonia, with a focus on fuel destined for export markets rather than domestic consumption. This strategic move forms part of India's broader objective to boost green hydrogen output to 5 million tons by 2030, a substantial increase from its current levels. The country aims to decarbonize key industries like refineries and steel mills and position itself as a primary green hydrogen supplier globally. Investments earmarked for green hydrogen production in India stand at around $187 billion, with export deals predominantly aimed at Europe and Japan. Notable figures such as Gautam Adani and Mukesh Ambani have expressed support for green hydrogen, with plans to venture into the sector. Despite these positive developments, the industry encounters hurdles in technology upscaling, cost reduction, and demand stimulation. To overcome these challenges, the finance ministry is contemplating categorizing green hydrogen as an infrastructure sector eligible for more accessible funding terms.
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