India Moves to Slash GST on Green Hydrogen from 18% to 5% to Boost Clean Energy Push – EQ
In Short : The Fitment Committee has recommended slashing GST on green hydrogen from 18% to 5%, a major boost for India’s clean energy push. The move aims to cut production costs, spur investments, and accelerate adoption in industries like fertilizers and steel. Final approval rests with the GST Council. If cleared, it could strengthen India’s global green hydrogen ambitions.
In Detail : The Fitment Committee has proposed a significant reduction in GST rates for green hydrogen, cutting it from 18% to just 5%. This move is aimed at making renewable energy more affordable and accelerating India’s transition to cleaner fuel alternatives. The recommendation is expected to benefit key industries that rely on hydrogen, including fertilizers, refining, and heavy transport.
By lowering the tax burden, the government hopes to incentivize greater production and adoption of green hydrogen. This aligns with India’s National Green Hydrogen Mission, which targets 5 million tonnes of annual production by 2030. The reduced GST could also enhance the competitiveness of domestically produced green hydrogen against conventional fossil-fuel-based options.
The proposal will now be reviewed by the GST Council for final approval. If passed, the new rate could be implemented swiftly, providing immediate relief to manufacturers and industries transitioning to green energy solutions. The decision reflects India’s commitment to sustainable development and reducing carbon emissions in line with global climate goals.
Experts believe the tax cut will attract more private and foreign investments into the green hydrogen sector. Lower production costs could make India a more attractive hub for electrolyzer manufacturing and large-scale hydrogen projects. This could position the country as a key player in the global green energy market.
Industries such as steel, chemicals, and long-haul transport are likely to benefit significantly from the reduced GST. These sectors, which are hard to decarbonize, could see faster adoption of green hydrogen as a cleaner alternative. The move may also encourage innovation and scaling up of renewable energy infrastructure across the country.
The GST reduction is seen as a crucial step in making green hydrogen economically viable for wider use. If approved, it could mark a turning point in India’s renewable energy strategy, boosting both domestic consumption and export potential. The decision underscores the government’s focus on sustainable growth while supporting industrial decarbonization efforts.
