Budget 2026: CII Advocates for Green Hydrogen Mandates and Incentives to Stimulate Demand, Calls for Policy Clarity
Industry body CII has urged the Indian government to establish clear mandates for green hydrogen, accompanied by incentives to boost demand and facilitate the country’s shift towards a cleaner industrial economy. The Confederation of Indian Industry (CII) highlighted that sectors heavily reliant on grey hydrogen, such as refining, fertilizers, and natural gas, are well-positioned to drive significant demand for green hydrogen, provided that the cost disparity is addressed through supportive policies. The CII emphasized that implementing greening mandates could help overcome economic barriers, ensuring certainty for producers and enabling cost reductions through economies of scale.
Addressing Economic Barriers
The CII has proposed that the government introduce green hydrogen blending mandates across various sectors, supported by mechanisms to offset costs. These could include carbon credit allocations for emissions saved, cross-subsidies—particularly in the fertilizer sector by providing cheaper natural gas when blended with green hydrogen—and viability gap funding to alleviate the financial burden on both industry and consumers. By addressing these economic challenges, the CII believes that the transition to green hydrogen can be accelerated, ultimately leading to a more sustainable industrial landscape in India.
Public Procurement as a Catalyst
Public procurement is seen as a crucial factor in scaling up the adoption of green hydrogen. The CII pointed out that large public infrastructure projects, such as housing, railways, ports, and bridges, present an opportunity to create predictable demand for green hydrogen derivatives. By mandating green procurement, the government could establish a reliable offtake, reduce costs through increased scale, and mitigate investment risks by providing producers with bankable demand. The CII estimates that significant demand could be generated if 10-15 percent of materials like steel, ammonia, and cement used in public projects are sourced from green hydrogen-based production units.
Building on Clean Energy Momentum
Chandrajit Banerjee, Director General of CII, emphasized the importance of building on India’s clean energy momentum. He noted that the country’s non-fossil fuel installed capacity reached 266.78 GW in 2025, marking a 22.6 percent increase from the previous year, with 49.12 GW of new capacity added. Banerjee stated that while this represents a significant milestone in India’s clean energy journey, the next phase of development will hinge on promoting advanced technologies like green hydrogen. The CII also advocates for the creation of industrial green hydrogen clusters with shared infrastructure, enabling smaller users, including MSMEs in ceramics, glass, and chemicals, to access green hydrogen at competitive prices.
Enhancing Export Potential
To bolster India’s position in the global green hydrogen market, the CII has called for the establishment of bilateral agreements with key potential importers such as Germany, the Netherlands, Japan, and South Korea. It also stressed the need for harmonizing Indian certification standards with international frameworks and simplifying trade documentation. Additionally, the CII proposed granting “deemed export” status to green hydrogen and its derivatives, allowing them to qualify for incentives under existing export promotion schemes. To attract private investment in early-stage projects, the industry body urged the government to develop financial instruments that would enhance the global competitiveness of India’s green hydrogen initiatives.
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