Budget 2026: CII pushes green hydrogen mandates with incentives to unlock demand; seeks policy clarity
The Confederation of Indian Industry said sectors that currently rely heavily on grey hydrogen — such as refining, fertilisers and natural gas — are best placed to anchor large-scale demand for green hydrogen, provided the cost gap between the two is addressed through policy support.“Greening mandates backed by incentives would help overcome this economic barrier, providing certainty to producers and enabling faster cost declines through economies of scale,” CII said.It suggested that green hydrogen blending mandates could be phased in across sectors and supported by cost-offset mechanisms such as carbon credit allocations for emissions saved, cross-subsidies — particularly in the fertiliser sector by offering cheaper natural gas when blended with green hydrogen — and viability gap funding to ease the cost burden on industry and consumers.CII said public procurement could play a decisive role in scaling up green hydrogen adoption.
Large public infrastructure projects — including housing, railways, ports and bridges — offer a ready channel to generate predictable demand for green hydrogen derivatives.Mandating green procurement would help establish anchored offtake, reduce costs through scale and de-risk investments by offering producers bankable demand, the industry body argued.According to CII, significant demand could be unlocked if 10–15 per cent of infrastructure-related materials such as steel, ammonia and cement used in public projects are sourced from green hydrogen-based production units.CII Director General Chandrajit Banerjee said India should build on the momentum of its clean energy expansion.
He noted that non-fossil fuel installed capacity rose to 266.78 GW in 2025, a 22.6 per cent increase over 2024, with 49.12 GW of fresh capacity added during the year.“While this represented a record-breaking year in India’s clean energy journey, the next level of development will come with important technologies like green hydrogen being promoted,” Banerjee said.The industry body also advocated the development of industrial green hydrogen clusters with shared infrastructure and aggregated demand.
Such clusters could enable smaller users — including MSMEs in ceramics, glass and chemicals — to access green hydrogen at viable costs, as they currently face high grey hydrogen prices.On exports, CII said bilateral agreements with major potential importers such as Germany, the Netherlands, Japan and South Korea would be critical to building overseas demand.
It also called for harmonisation of Indian certification standards with global frameworks and simplification of trade documentation.CII further suggested granting “deemed export” status to green hydrogen and its derivatives, which would allow them to qualify for incentives under existing export promotion schemes.To attract private capital into early-stage projects, the industry body said the government should develop financial instruments that can make India’s green hydrogen ventures globally competitive.
