India Banks on Cost Advantage to Scale Up Green Ammonia Exports by 2027

India's renewable hydrogen developers are counting on their cost competitiveness and growing offtake interest to unlock export opportunities for 'green ammonia' by 2027, even as global uncertainties and sluggish progress on binding offtake agreements pose challenges to the sector, according to S&P Global Commodity Insights,

India has set an ambitious target of producing 5 million metric tonnes (mt) of renewable hydrogen annually by 2030, with plans to export over half of this production. Emerging hydrogen hubs in coastal states like Odisha, Andhra Pradesh, Tamil Nadu, Kerala, and Gujarat are at various stages of development, with many projects currently focused on front-end engineering design (FEED) and final investment decisions (FID).

According to Anri Nakamura, Associate Director at S&P Global Commodity Insights, India's ability to produce cost-effective green hydrogen makes it an attractive supplier for markets like Europe, where strict mandates require the use of renewable hydrogen. However, she noted that for Far East markets like South Korea and Japan, the carbon intensity limits for clean hydrogen are more lenient, making blue hydrogen and ammonia from other regions more competitive than Indian green hydrogen or ammonia.

India currently has 143 renewable and low-carbon hydrogen projects with a combined capacity of 10.55 million mt, according to the Commodity Insights Hydrogen Production Assets database. The government’s INR 197.44 billion (USD 2.37 billion) National Green Hydrogen Mission is driving investments in renewable hydrogen, ammonia, electrolysers, and hydrogen hubs to position India as a global leader in the sector.

Several major developers, including AM Green and ACME, are moving ahead with renewable ammonia projects, securing non-binding offtake agreements and initiating early construction efforts.

Mahesh Kolli, Group President of AM Green, stated that his company’s project has reached FID and engaged technology partners, underscoring that despite concerns over global infrastructure and transport challenges, demand for green hydrogen remains strong in Asia. AM Green’s 1 million mt/year renewable ammonia project in Kakinada, Andhra Pradesh, is expected to commence production in the second half of 2026. The company has already signed offtake term sheets with global players such as Uniper, Yara, RWE, and BASF, among others, for various renewable hydrogen applications.

One of the biggest obstacles facing the industry is the significant gap between production costs and buyers' willingness to pay. While renewable hydrogen production costs in India remain above USD 5/kg, potential buyers, particularly in the refining and fertiliser sectors, are unwilling to pay beyond USD 4/kg.

For renewable ammonia, Indian fertiliser companies imported conventional ammonia at an average price of USD 398/mt in 2024, while the price of renewable ammonia was significantly higher, at around USD 800/mt (FOB India). This discrepancy has made negotiations for long-term supply agreements difficult.

Platts’ latest market assessments indicate that the cost of hydrogen production via alkaline electrolysis (including capital expenditures) in Queensland, Australia, stood at USD 4.32/kg as of March 12, reflecting a 16.44 percent decline from the previous month. In Japan, the cost was USD 5.44/kg, marking a 19 percent drop in the same period. These price movements indicate the broader cost pressure on renewable hydrogen projects worldwide.

The industry is closely watching the fate of Indian hydrogen projects as geopolitical and policy shifts unfold globally. Key developments include the US’ changing stance on hydrogen incentives, Europe’s industrial cost crisis, and the under-subscription of South Korea’s hydrogen-to-power tender in late 2024.

While some projects in India are progressing towards execution, others are working to optimise costs and improve efficiency before proceeding with construction. Nishaanth Balashanmugam, Director of Green Hydrogen India, emphasised that the next six to seven months will be critical in determining whether key projects advance as planned.

Securing firm offtake agreements remains a major challenge, particularly as regulatory uncertainties persist in Europe regarding the acceptance of RED III rules and the International Maritime Organisation's 5 percent blending proposal for renewable fuels. However, domestic demand from decarbonisation-driven industries and the need to comply with the EU Carbon Border Adjustment Mechanism (CBAM) are expected to support Indian projects.

Industry experts believe that upcoming Indian renewable hydrogen and ammonia tenders will play a key role in price discovery and could provide crucial signals for potential buyers and investors.

Harish Jayaram, Vice President of Hydrogen Business Development at Hygenco, highlighted that India's refinery tenders, which aim to set up 47,000 mt/year of renewable hydrogen capacity, will be closely watched by global stakeholders. The Solar Energy Corporation of India (SECI) renewable ammonia tender for fertiliser firms, which recently saw amendments, is another significant development.

He further added that the SECI tender, along with India’s participation in South Korea’s upcoming hydrogen-to-power tender and Japan’s Contracts for Difference scheme, will shape India’s competitive position in the global hydrogen economy in the coming months.