Industry Calls for Green Hydrogen Mandates and Incentives in Upcoming Budget
The Confederation of Indian Industry (CII) is urging the government to introduce clear mandates and financial incentives for green hydrogen in the upcoming Union Budget for 2026. This push aims to unlock large-scale demand and solidify India’s position in the global clean energy transition. The industry body argues that strategic policy support is now critical to move from pilot projects to widespread commercial adoption.
Bridging the Cost Gap to Fuel Demand
Green hydrogen is produced by splitting water using renewable electricity, resulting in a fuel with zero carbon emissions. While it holds immense promise for decarbonizing heavy industries, it remains more expensive to produce than conventional hydrogen made from natural gas. The CII’s core recommendation focuses on bridging this “green premium” or cost gap to make the clean fuel competitive.
The proposal suggests implementing consumption mandates for specific industries. This would require sectors like oil refining and fertiliser manufacturing to use a certain percentage of green hydrogen in their processes. Such mandates would create guaranteed, long-term demand, giving investors the confidence to fund large production facilities. To further support this, the CII is advocating for direct incentives, such as production-linked schemes or viability gap funding, to lower the initial cost burden for both producers and consumers.
Key Sectors Poised for Large-Scale Adoption
The CII has identified oil refining and fertiliser production as anchor sectors for this transition. These industries are already large consumers of conventional hydrogen. For example, refineries use hydrogen to remove sulphur from fuels, and fertiliser plants use it as a key feedstock for making ammonia. Mandating a gradual shift to green hydrogen in these sectors would create a massive and stable market overnight.
This strategy provides a clear pathway for decarbonizing hard-to-abate industries that cannot easily run on batteries or direct renewable power. Policy clarity on mandates would allow companies in these sectors to plan their capital expenditure and technology upgrades for the coming years. It also aligns with India’s national Green Hydrogen Mission, which aims to make the country a global hub for the production and export of this clean fuel.
The Need for Long-Term Policy Certainty
Beyond immediate financial incentives, the CII’s appeal emphasizes the need for long-term policy clarity. Investors and companies require a stable regulatory framework to commit billions of dollars in funding for green hydrogen projects. A clear roadmap for mandates, coupled with consistent incentives outlined in the Budget, would reduce perceived risk.
This approach is seen as essential for attracting domestic and international capital. It also helps Indian industry build a first-mover advantage in a key technology of the future. As other nations roll out their own subsidy programs, like the United States’ Inflation Reduction Act, a decisive policy move from India is considered crucial to remain competitive. The industry’s call sets the stage for the 2026 Budget to be a potential landmark moment for India’s clean industrial future.
