In a significant move towards advancing its green energy ambitions, the Indian government is contemplating tariff reductions on machinery imports crucial for green hydrogen production.
This initiative aligns with Prime Minister Narendra Modi's vision to establish India as a prominent hub for this eco-friendly fuel.
Sources close to the matter reveal that the government is exploring the possibility of exempting certain equipment from import duties.
Additionally, there are discussions to lower the goods and services tax on green hydrogen and green ammonia, which currently stands at 12 per cent.
However, these proposed tax benefits would be applicable exclusively to fuel produced for export purposes, not for domestic consumption.
Green hydrogen, produced by utilising renewable energy to separate hydrogen and oxygen atoms in water, is at the centre of India's ambitious plan to decarbonise heavy industries such as refineries and steel mills.
The country aims to increase its green hydrogen production from virtually zero to 5 million tons by 2030, positioning itself as a major supplier in the global market.
The green hydrogen sector has attracted substantial interest from prominent Indian industrialists, including billionaires Gautam Adani and Mukesh Ambani, who have announced their intentions to enter this emerging field.
Despite this enthusiasm, the industry faces significant hurdles in scaling up technology, reducing costs, and stimulating demand.
According to a recent report by BloombergNEF, proposed investments in green hydrogen production in India amount to approximately USD 187 billion.
The majority of export agreements signed thus far are for shipments to Europe and Japan, indicating growing international interest in India's green hydrogen potential.
In a further effort to bolster the sector's growth, the finance ministry is reportedly considering including green hydrogen among infrastructure sectors eligible for preferential funding terms.
This move could provide additional financial support to accelerate the development of green hydrogen projects in the country.
As of now, official responses from India's finance ministry and ministry of new and renewable energy regarding these potential policy changes are pending.
The proposed measures, if implemented, could significantly boost India's aspirations to become a global leader in green hydrogen production and exportation.