The government is proposing an incentive of up to Rs 50 per kilogram (kg) for the production of green hydrogen in India, which, according to media reports, will decrease to a maximum of Rs 30 per kg by the third year of the plan.

In India, on the other hand, it costs about 300 rupees per kg to make green hydrogen.

According to Reuters, which cited a senior government official, India intends to give green hydrogen fuel producers incentives worth at least 10 percent of their costs as part of a US$2 billion scheme that will begin before the end of June.

Renewable Energy Secretary Bhupinder Singh Bhalla was quoted as stating, "Draft concept notes on the program have been circulated to industry chambers and associations for consultations." The government will grant approximately Rs 13,000 crore for the production of green hydrogen, with the remainder going towards the production of electrolysers, which are used to split hydrogen and oxygen molecules using electricity.

The news comes months after the Centre announced an ambitious plan as part of its National Green Hydrogen Mission (NGHM) in January of this year. The plan had a total initial cost of Rs 19,744 crore, of which Rs 17,490 crore was set aside for production-linked incentives (PLIs) for making green hydrogen and electrolysers.

Close to 3.6 million metric tons (MMT) of green hydrogen is expected to be produced over the next three years, with bidding for the production linked incentives (PLIs) set to take place in three tranches, with a total bid capacity of 400,000 MMT in each. The highest annual allocation to a single bidder is 150,000 MMT.

According to the draft, the incentive will be higher in the beginning and progressively decrease over the course of its existence.

Indian companies like Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy, ReNew Power, and Acme Solar, which have already said they want to use green hydrogen, are likely to be interested in the contracts.