Hydrogen Production in India: Pushing Costs Down to $2/kg and Beyond

At the Darbari Seth Memorial Lecture hosted by TERI on August 20, 2025, Nitin Gadkari threw down a challenge: can India slash green hydrogen costs from today’s $4.6–6.7/kg to about $2/kg by 2030, maybe even $1/kg down the road? Nail that, and India won’t just secure its energy future—it could emerge as a powerhouse exporter of clean fuel. Gadkari didn’t just toss out bold numbers—he called on everyone from policymakers to entrepreneurs to roll up their sleeves. Pull this off, and we might just rewrite global trade patterns, turning what’s always been an import headache into a strategic export asset.

In a nation that imports over 85% of its oil and gas, the push for hydrogen production via electrolysis isn’t just about trimming emissions—it’s about energy autonomy. With our 2025 import bill north of $150 billion, tapping domestic solar, wind, and even municipal waste for electrolytic hydrogen helps cushion against global price shocks and bolsters the balance of payments. This isn’t some far-off fantasy: with solar parks sprawling across deserts, breezy coastal wind farms, and the promise of turning crop residues into feedstock, the math is staring us in the face. It’s about striking the right balance between supply and demand—and getting our hydrogen infrastructure humming where it counts.

Dropping Production Costs: The $2/kg Milestone

A fresh take from the Institute for Energy Economics and Financial Analysis (IEEFA) reckons that with smart policy nudges and rock-bottom renewables prices, green hydrogen costs could plunge by up to 40%—pushing us toward that $2/kg sweet spot in the next five years. Right now, we’re hovering near $6/kg, thanks to pricey electrolyzers and big capital outlays. But if India scales up electrolyzer output, streamlines the supply chain, and keeps solar and wind tariffs in that $25/MWh neighborhood, the economics get downright tasty. Imagine a future where electrolyzers are churned out like smartphones—assembly lines humming, costs plummeting. That’s what startups and global giants are eyeing, teaming up on gigafactories and R&D hubs. Combine that with falling module prices and you’ve got a recipe for real disruption. Hitting $1/kg? It remains a stretch goal, but hey, stranger things have happened.

Leveraging Waste and Wastelands

Every day, India churns out over 150,000 tonnes of solid waste, about 60% of it organic. Under the National Green Hydrogen Mission, innovators are rolling out anaerobic biodigesters that turn scraps into methane—and then into hydrogen. Pilot plants in urban centers have validated the approach, and incentives like guaranteed feedstock offtake are coaxing projects onto both city landfills and unused rural tracts. But it’s not just organic scraps: some startups are experimenting with mixed-plastic gasification and agro-waste blends. On the policy side, local bodies are lured with revenue-sharing models to convert their dumps into mini hydrogen hubs. It’s early days, but cutting both methane emissions and energy imports in one fell swoop has investors perking up.

Pilot Projects on the Road

The government has earmarked ₹208 crore for five transport trials—rolling out 37 hydrogen vehicles (buses, vans, small trucks) on 10 routes across multiple states. Nine public refueling stations are springing up. Think of these pilots as R&D on wheels: operators are fine-tuning logistics, safety drills, dispenser tech, even apps that let drivers check station availability in real time. Early wins? Sub-five-minute fill-ups, range reliability that’s better than expected, and pilots of mobile refueling units—imagine a tanker for hydrogen—so rural routes get in on the act. Safety exercises with first responders and digital monitoring of pressure and temperature make sure no loose ends are left hanging.

Next up, larger demonstration hubs in Tamil Nadu and Bihar will integrate green ammonia co-production—an easy-to-ship hydrogen carrier—with ammonia cracking units, so you can ship ammonia overseas and crack it back into hydrogen on arrival. Local plants will test different catalyst blends, borrowing best practices from Europe and Japan, and adding a dose of homegrown innovation.

Scaling Renewables and Infrastructure

To meet the government’s goal of 5 million tonnes per year of green hydrogen by 2030, analysts say we’ll need roughly 125 GW of dedicated renewables—on top of the 150 GW of wind, solar, and small hydro already humming by mid-2025. Policies that allow projects to buy clean power directly are great for economics, but they stir up headaches for hydrogen infrastructure: transmission upgrades, new storage systems, and flexible dispatch protocols need to keep pace with intermittent supply. Thankfully, battery energy storage and pumped hydro pilots are bubbling up, and green hydrogen itself is being eyed as long-duration storage—absorbing excess juice when renewable output spikes. Plus, smart grids, digital twinning, and AI forecasting are creeping in to keep it all from wobbling. Some operators are even trialing vehicle-to-grid tech, turning parked fleets into mobile batteries. And in remote regions, islanded microgrids combining renewables and green hydrogen could reclaim energy independence.

Policy Tailwinds and Fiscal Incentives

The National Green Hydrogen Mission is the wind in India’s sails: 25-year open-access waivers, GST slashed from 18% to 5%, and production-linked incentives covering up to 20% of project costs. Unlike models that lean on elusive tax credits, India’s direct-subsidy approach is a shot in the arm for local electrolyzer manufacturing and budding hydrogen hubs. States like Gujarat, Karnataka, and Andhra Pradesh are tossing in their own grant sweeteners, making it hard for investors to say no. Beyond cash, we’re seeing fast-tracked environmental clearances and one-window policy portals—cutting red tape so quickly you might miss it. The Mission’s carrot-and-stick strategy is even grabbing the attention of countries from the Middle East to Africa, eager to replicate India’s playbook.

Industry Shifts and New Jobs

The ripple effects of green hydrogen stretch far and wide. Auto makers—fresh off India’s leap to the world’s third-largest market—are eyeing fuel cell buses and heavy-duty trucks. Steel giants are piloting decarbonization efforts at major plants. Chemical firms see green H2 as the ticket to low-carbon ammonia and methanol, decarbonizing one of the world’s most emission-intensive sectors. Maritime shipping lines are signing MoUs to test hydrogen-fueled vessels, while startups explore hydrogen blends for aviation. Even bamboo plantations on degraded lands are sprouting as bio-feedstock hubs—ticking boxes for rural jobs and industrial decarbonization. All told, these moves could rewrite entire supply chains and kick-start fresh employment engines across the country.

Challenges on the Path Ahead

No bold transition comes without roadblocks. Electrolyzer costs must keep sliding—innovation plus scale is the name of the game—but bottlenecks in membranes and rare metals could throw a wrench in the works. Pipelines, storage tanks, and refueling outposts are still sparse beyond major metros. Water use in electrolysis raises eyebrows in dry regions. Land-use conflicts might flare if bamboo farms or waste processing camps encroach on farmland. Then there’s the human element: training a new workforce—from electrolyzer technicians to hydrogen safety officers—and updating standards so tanks, valves, and pipework all play nicely together. Financing remains a hurdle, too; banks and insurers need to get comfortable with a fuel that still has a whiff of sci-fi. Unless carbon pricing or strict emissions mandates ramp up, some industries may stick with cheaper grey hydrogen, undercutting the green push.

What’s Next?

Nitin Gadkari drove home one crystal-clear message: execution is everything. Align policies, tech, and entrepreneurial drive, and $2/kg could be just the first milestone in India’s green hydrogen journey. Hit 5 MMT a year by 2030, and annual exports could top $10 billion—padding forex reserves and igniting rural livelihoods. From waste-to-H2 factories to electrolyzer mega-plants, the chess pieces are moving into place. Picture sprawling electrolyzer parks in Rajasthan, wind-and-solar farms in Kutch, and plastic-waste hubs in Pune all feeding into a national hydrogen belt. If it comes together, India could tilt global energy balances, give emerging markets a leg up, and reinvent geopolitics around clean fuel. The countdown has begun—don’t blink, because every quarter is going to matter.