India Targets 1 Million Tonnes of Domestic Green Ammonia for Fertiliser Sector

The Solar Energy Corporation of India is preparing tenders for an additional 1 million metric tonnes of locally produced green ammonia annually for the country's fertiliser sector, according to managing director Akash Tripathi, extending India's push to reduce reliance on imported hydrogen products. The move follows offtake agreements signed in March covering 724,000 tonnes of green ammonia, involving fertiliser companies and suppliers including ACME Cleantech and NTPC Green, which together could cover roughly a third of the country's requirements for the low-carbon fuel. India's fertiliser sector currently consumes approximately 20 million tonnes of grey hydrogen annually, largely imported or produced from imported natural gas.

 

Why Grey Hydrogen Dependency Creates Both a Climate and Security Problem

 

Grey hydrogen, extracted from coal or natural gas through steam-methane reforming, differs fundamentally from green hydrogen, which is produced using renewable electricity such as solar power to split water molecules, in that grey hydrogen production releases substantial carbon dioxide as a byproduct of the fossil fuel-based extraction process. India's fertiliser sector's reliance on 20 million tonnes of grey hydrogen annually therefore represents both a significant emissions source and, given the source article notes that supplies have been disrupted by conflict in Iran, a genuine energy security vulnerability tied to volatile fossil fuel import routes.

That dual exposure, carbon-intensive production combined with import dependency on a commodity whose supply chains can be disrupted by geopolitical instability, is precisely the combination that makes domestic green hydrogen and ammonia production strategically attractive to Indian policymakers beyond climate considerations alone. Replacing imported grey hydrogen with domestically produced green hydrogen addresses both problems simultaneously, reducing emissions from fertiliser production while insulating the sector from the kind of supply disruptions the article specifically references.

 

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Why the Cost Reduction Signals a Genuine Shift in Commercial Viability

 

India has brought green hydrogen production costs down to approximately 279 Indian rupees, around $3, per kilogram, a substantial reduction from roughly $5 per kilogram when the government launched its National Green Hydrogen Mission in 2023. That roughly 40 percent cost decline over a relatively short period is a meaningful signal about the technology's maturing commercial trajectory, since green hydrogen's viability as a genuine substitute for fossil-derived hydrogen depends heavily on closing the cost gap with conventional grey hydrogen production, which benefits from decades of established infrastructure and lower per-unit production costs.

That cost trajectory is backed by approximately $2.1 billion in government incentives supporting India's target of producing 5 million tonnes of green hydrogen by 2030, a substantial public investment aimed at accelerating the cost curve faster than market forces alone would likely achieve, similar in structure to how many governments have used targeted subsidies to accelerate cost reduction in other emerging clean energy technologies such as solar photovoltaics and battery storage in earlier decades.

 

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Why India's Trajectory Diverges From Western Green Hydrogen Retreats

 

The article notes that India's push comes even as several Western countries have scaled back ambitious green hydrogen goals since the start of this decade, citing cost constraints and slower-than-expected demand growth. That divergence is notable: while some Western green hydrogen projects have struggled to secure committed buyers and faced production costs that proved harder to reduce than initially projected, India appears to be achieving cost reductions and building committed demand through its offtake agreement structure, in which SECI pools demand from fertiliser producers and secures supply commitments from green hydrogen producers.

That pooled demand and centralised procurement approach may partly explain why India's programme has continued advancing even as some comparable Western initiatives have retreated, since aggregating demand across multiple fertiliser producers into large, tendered supply agreements gives green hydrogen producers the kind of revenue certainty needed to justify production investment, a financing dynamic similar to the offtake-driven project financing mechanisms seen in renewable energy and carbon removal deals covered elsewhere in recent reporting.

 

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What the Current Production Scale Reveals About the Scale of Ambition

 

Industrial companies including Larsen & Toubro, Bharat Petroleum, GAIL and JSW Steel currently produce only about 8,000 tonnes of green hydrogen and its derivatives annually under the National Green Hydrogen Mission, a figure that puts the scale of India's stated ambitions into sharp perspective: the newly proposed 1 million tonnes of green ammonia alone would represent more than 100 times current green hydrogen and derivative production combined. That gap between current output and the tendered targets illustrates how much industrial capacity expansion India's green hydrogen sector needs to build over a relatively short timeframe to meet both the fertiliser sector's ammonia needs and the broader 2030 national target.

SECI is also preparing separate green methanol tenders targeted at the domestic market, expected within the next two months, extending the same procurement model beyond ammonia into another hydrogen derivative. Whether India's tender-based, demand-pooling model succeeds in scaling green hydrogen and its derivatives from the current 8,000-tonne production base to the millions of tonnes its targets imply, and whether the cost reductions achieved so far continue at a pace that keeps green ammonia competitive with imported grey hydrogen alternatives, will determine whether this initiative meaningfully reduces the fertiliser sector's import dependency and emissions footprint at the scale the government is targeting.