India’s electrolyser vision: Self-reliance or global leadership?

India’s potential to lead the green hydrogen revolution through local electrolyzer manufacturing is a topic of growing importance. The country possesses tremendous potential to lead the global electrolyzer manufacturing industry and drive green hydrogen production.

India encounters specific challenges in electrolyzer production: the procurement of critical minerals, substantial investments for indigenous manufacturing, sustainable water usage, including addressing water scarcity and quality issues, and resource-intensive research and development aimed at improving efficiency and resource requirements. These challenges must be addressed to establish a cost-effective green hydrogen production infrastructure in India.

IBT explores India’s capabilities and initiatives in this field, along with market trends and key considerations for becoming a hub for electrolyzer manufacturing.


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Green hydrogen, lauded as one of the cleanest energy forms globally, is considered the ultimate path to achieving net-zero emissions. Given that electrolyzers are central to the green hydrogen value chain, the growing global interest in clean fuel presents a promising opportunity for local electrolyzer manufacturers.

According to Research & Markets, the global electrolyzers market is projected to reach US$ 4.27 billion by 2030, at a CAGR of 21.2% from 2023 to 2030. Electrolyzers use electricity to split water into hydrogen and oxygen, serving as a critical technology for low-emission hydrogen production from renewables. The capacity for electrolytic hydrogen production has been increasing recently.

Currently, hydrogen production relies heavily on fossil fuels. However, in the Net Zero Emissions by 2050 scenario, low-emission hydrogen becomes pivotal for challenging-to-decarbonize sectors like heavy industry and long-distance transport. Renewable electricity-powered electrolysis stands as the primary method for such production.

The three primary types of electrolyzers are proton exchange membrane (PEM), alkaline, and solid oxide. These electrolyzers operate slightly differently based on the electrolyte material used. Electrolyzers vary in size, from small appliances suitable for localized hydrogen production to large-scale facilities delivering hydrogen via trucks or pipelines.

Market growth is spurred by the expansion of renewable and nuclear electricity generation, growing investments in green energy initiatives, and increasing government attention to hydrogen technologies.

Nonetheless, a shortage of raw materials hampers the global electrolyzer market’s growth. The rising affordability of electrolyzers is poised to offer growth opportunities for market participants. Yet, the significant energy demands of electrolyzers present a significant challenge to market expansion.

Electrolyzer Market Trends 

A recent EY report titled “Shortage of Electrolyzers for Green Hydrogen” has brought attention to the significant global increase in production capacity for green hydrogen over the past few months. The report projects that the global demand for green hydrogen is expected to reach 63 million tons (MT) per year by 2030.

In January 2023, the Indian government approved the National Green Hydrogen Mission, aiming to produce 5 MT of green hydrogen annually by 2030, with an initial investment of US$ 2.5 billion. This funding will be utilized for various purposes, including the establishment of electrolyzer manufacturing capacity ranging from 60-100 gigawatts (GW) and renewable energy (RE) capacity of 125 GW, all dedicated to the production of green hydrogen.

The mission aims to achieve green hydrogen production of 5 million tons per annum (MTPA) by the year 2030, with a long-term goal of achieving net-zero emissions by 2070. To achieve this goal, ensuring cost competitiveness for hydrogen production is crucial. Electrolyzers, which contribute around 30-40% to the levelized cost of hydrogen (LCOH), play a central role in the green hydrogen value chain.

The key to accelerating the green hydrogen ecosystem in India lies in the localization of electrolyzer manufacturing. The recently announced Production-Linked Incentive (PLI) program under the SIGHT initiative by the Indian government marks the first step toward promoting domestic production.

India’s imports of Machines and apparatus for electro-plating, electrolysis/electrophoresis were recorded at US$ 45.6 million in 2022-23, growing by 40% YoY.This move could position India as a prominent global hub for electrolyzer manufacturing, serving not only domestic needs but also potentially becoming a leading electrolyzer exporter.

When we asked Santosh Gurunath, CEO AND Co-founder of Umagine Hydrogen Pvt. Ltd, about the potential of India to become a global hub for electrolyzer manufacturing and green hydrogen production, he said, “India has a very good potential to become a global hub, especially for alkaline water electrolyzers. The core manufacturing sector that is needed to support the set-up and scale-up of the industry is already present, and it is a matter of capitalizing on that and collaborating to build large-scale GW factories for electrolyzer manufacturing. With respect to green hydrogen production, we have a nuanced view.”

He also added, “Although India has great potential with regards to renewable energy, land availability, port infrastructure, and water infrastructure, the Indian electricity grid is still predominantly dominated by thermal power plants. Additionally, there are still widespread power shortages, load shedding, and blackouts in several regions of India. Using the premium land for lucrative and high-CUF renewable energy plants to produce export-oriented green hydrogen and ammonia at the cost of not decarbonizing the Indian electricity grid doesn’t make a lot of sense. India should rather focus on green hydrogen production for decarbonizing its own hard-to-abate sectors such as steel, fertilizers, and heavy mobility than have the ambition to be a global export hub for green hydrogen.”

Read More:

What can India do to become an industrial electrolyzer hub?

Indian manufacturers should seize this opportunity and establish world-class facilities. Key points to consider include:

Choosing the right technology and technology partner is vital

Alkaline electrolyzers currently dominate the market and are expected to remain the most preferred technology. Among alternative technologies, PEM is emerging as a promising electrolysis technology.

As of today, alkaline technology is cost-effective, with an average cost ranging from US$ 700-1,100 per kilowatt (kW) and an efficiency of approximately 70%, producing 0.021 kilograms of H2 per kilowatt-hour (kWh). In contrast, PEM technology costs between approximately US$ 1,200 and US$ 2,000 per kW, with an efficiency of around 60%, producing 0.018 kilograms of H2 per kWh. It is expected that as PEM technology advances, it will achieve cost parity with alkaline technology, targeting around US$ 500 per kW by FY-2030.

Industry players are exploring technology diversification. For instance, NEL has exposure to both alkaline and PEM technologies, providing an advantage in case one technology prevails in the future.

Solid oxide and AEM (Anion Exchange Membrane) technologies are in their early stages, with companies like Bloom Energy (US) and H2e Power (IN) developing electrolyzers based on solid oxide, while Enapter (IT) and Hydrolit (IL) are among those working on AEM technology.

A steady supply of raw materials to avoid bottlenecks

The supply of many minerals and metals essential for electrolyzers is heavily concentrated in specific regions, posing a significant supply chain risk for manufacturers. In the case of PEM technology, the supply of critical raw materials is highly centralized, with South Africa being the source of over 70% of platinum and over 85% of iridium required globally.

Share of electrolyser producing technologies

Source: IEA

Solid oxide electrolyzers, while currently produced at a laboratory scale, hold future potential. However, they face an even greater supply concentration issue, as more than 90% of critical materials originate from China.

To address these challenges, electrolyzer manufacturers worldwide will need to collaborate with key stakeholders to mitigate raw material dependency issues through strategies such as strategic sourcing and forming robust partnerships.

Make plans for substantial investments and implement substantial projects to increase efficiency

Economies of scale can be realized by expanding the size of electrolyzer facilities. In stack manufacturing, as the number of electrolyzer units produced increases, the shared costs related to assembly lines, buildings, and staff decrease, leading to the attainment of economies of scale.

It is expected that manufacturing a greater number of stack assemblies will result in a cost reduction of up to 90% by transitioning from a manual to a semi-automated process, particularly when reaching a volume of approximately 1 gigawatt (GW) per year.

When we asked Manoj Kumar, Chief General Manager (Drilling), about the challenges that India may face while adapting electrolyzer production, he said, “Reducing the cost of production is the major challenge in green hydrogen production. Given India’s substantial potential for renewable energy generation, it has the opportunity to lower the costs associated with manufacturing green hydrogen and electrolyzers. Consequently, this could position India as a prominent hub for green hydrogen production.”

Partner with dependable hydrogen suppliers to secure anchor capacity

In anticipation of rising demand for electrolyzers in the coming years, industry players are actively seeking strategic collaborations with key hydrogen producers across various industry segments. These partnerships are anticipated to facilitate the growth of a green hydrogen ecosystem.

Numerous electrolyzer manufacturers are forging alliances with energy and utility companies because renewable power hubs are deemed more suitable for green hydrogen production, primarily due to their access to renewable electricity.

While adapting to these changes, India may face several challenges. As per Santosh, the key challenge will be the speed with which Indian manufacturers can build GW-scale manufacturing facilities relative to those of their Chinese counterparts. In China, there is incredible support from the government to set up such large-scale plants, and the support currently offered by the Indian government is very little compared to that. Without such incentives, the Indian manufacturers will be wary of pumping in 100s of millions of dollars of capital into building infrastructure, which is uncertain of a clear offtake on day 1.

From a technology and supply-chain perspective, Indian manufacturers will be able to scale and catch up. If the action is not taken quickly enough, India will follow the solar panel manufacturing trend, which is more than 85% dominated by Chinese manufacturers.


Policy & regulatory environment

India has the potential to become a cost-effective hub for global electrolyzer production. The manufacturing costs of Indian electrolyzers are projected to be over 30% lower than those of Western manufacturers and on par with those in China, according to an article in ET by AT Kearney consultants Sudeep Maheshwari, Anand Mantri, and Aishwarya Karnawat. This cost advantage is driven by factors such as factory capital expenditure (capex) and operating expenditure (opex).

Setting up a giga-scale facility in India is expected to require one-third of the initial capex compared to a similar facility in Europe. This cost advantage is due to lower expenses related to construction, equipment, and land charges. In terms of OPEX costs, India is likely to have cost structures comparable to China for scaled facilities. This is primarily because India benefits from low-cost labour, which offsets China’s advantage in raw materials. Following are key policy interventions that India can adopt towards capitalising on this potential.

PLI guidelines for electrolyzer production

Implementing a favourable PLI policy for electrolyzers, akin to the incentives previously introduced for solar modules and storage, would empower Indian players to scale up in this emerging sector. This, in turn, would help them attain cost competitiveness for green hydrogen production.

Recently released PLI guidelines have been formulated to cover two critical areas within the Green Hydrogen ecosystem, namely, the production of Green Hydrogen and the manufacturing of electrolyzers in India. To support these efforts, a total budgetary outlay of Rs 13,050 crore has been allocated for Green Hydrogen production, while the manufacturing of electrolyzers receives an allocation of Rs 4,440 crore. This significant investment underscores India’s dedication to fostering the green hydrogen industry and becoming a global electrolyzer manufacturing hub in line with the PLI policy.

Mandatory purchase obligation

Green hydrogen is expected to have a higher cost compared to gray hydrogen, and the current value of Certified Emissions Reductions (CERs) is unlikely to offset this premium in the short term. While the demand for green hydrogen will primarily be driven by the US and European markets, it is equally important to establish local demand for green hydrogen. This approach would enable electrolyzer manufacturers to collaborate with domestic hydrogen producers and expand their capacity for exports.

To promote the adoption of green hydrogen, the government can consider implementing purchase obligations, similar to renewable purchase obligations applicable to utilities and captive generators. Specifically, these purchase obligations could target sectors such as petroleum refining and fertilizer, requiring them to gradually incorporate green hydrogen into a certain proportion of their energy requirements.

Framework for efficient hydrogen contraction

The current framework in place for molecules like hydrogen is not conducive to accelerating the consumption of green hydrogen. To address this issue, the government should establish an intermediary entity capable of facilitating long-term offtake agreements for green hydrogen. Additionally, there is a need to develop an efficient contracting framework for subsidizing green hydrogen until it reaches cost parity with gray hydrogen.

Policy support from the government, including the provision of long-term contracts, mandatory purchase obligations, and incentives to address the challenges of high costs, is anticipated to bolster the green hydrogen market. This support offers India a distinct opportunity to establish itself as a global hub for electrolyzer manufacturing.


In conclusion, India possesses tremendous potential to lead the global electrolyzer manufacturing industry and drive green hydrogen production. Recent initiatives like the PLI program and the National Green Hydrogen Mission showcase the government’s dedication. 

To achieve this vision, Indian manufacturers must diversify technology, secure raw materials, and invest in scaling up production. Furthermore, strategic partnerships and robust policy support, including PLI guidelines and purchase obligations, are essential. By taking these steps, India can expedite its transition to a green hydrogen-powered future and stand at the forefront of this transformative industry.

By harnessing its potential, India can expedite its journey towards a green hydrogen-powered future, establishing itself as a prominent player in this transformative field.

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