Gujarat Unveils Green Hydrogen Policy 2025, Targets 3 MMTPA Production by 2035

The Government of Gujarat has unveiled the Green Hydrogen Policy 2025, outlining an ambitious roadmap to make the state a major hub for green hydrogen production and exports.

The policy targets the creation of 3 million metric tons per annum (MMTPA) of green hydrogen production capacity by 2035, supported by 30 GW of electrolyser capacity and 75 GW of renewable energy capacity.

To achieve these goals, Gujarat aims to attract investments of nearly INR 5 trillion (~USD 55.6 billion) across the green hydrogen and renewable energy value chains. The state also expects the policy to generate around 600,000 direct and indirect jobs, reduce natural gas consumption by at least 2 MMTPA, and lower carbon dioxide emissions by approximately 5 MMTPA.

The policy applies to green hydrogen production projects, hydrogen derivative units such as green ammonia and green methanol, storage and transportation infrastructure, and end-use application units located within Gujarat. Projects situated in special economic zones (SEZs), domestic tariff areas (DTAs), and export-oriented units (EOUs) are all covered.

Eligible developers include private companies, public sector undertakings, joint ventures, special purpose vehicles, government departments, and local authorities. All projects must involve new plant and machinery and be registered and sanctioned during the policy period, which remains valid until December 31, 2035, unless replaced earlier.

Renewable energy for green hydrogen production can be sourced through captive generation, third-party open access, distribution licensees, power exchanges, or a combination of these routes. The policy also permits the use of energy storage systems charged from renewable sources.

Project allocation may be undertaken through competitive bidding or in accordance with directions issued by the Apex or Executive Committee. Projects proposed by state and central PSUs may be approved directly based on committee decisions.

The policy clearly states that beneficiaries can avail incentives under only one incentive category for a given project, preventing duplication of benefits across multiple sections or state policies.

For electrolysis-based green hydrogen projects, the policy offers targeted incentives for electrolyzer capacities ranging from 1 MW to 10 MW, subject to an overall cap of 500 MW.

Developers are eligible for a capital subsidy of 20% of eligible capital expenditure, capped at INR 10 million per MW of electrolyzer capacity. Additional capital subsidies are available for battery energy storage systems and oxygen collection and bottling infrastructure, subject to prescribed technical and cost limits.

To reduce operating costs, the policy provides 50 percent reimbursement of transmission and wheeling charges for renewable electricity used in hydrogen production for five years from the date of commissioning. Full reimbursement of land registration and stamp duty charges, up to a specified ceiling, is also permitted.

Recognising alternative hydrogen production pathways, the policy extends support to biomass-based green hydrogen projects with capacities of up to 5 kilotons per annum. A maximum of five such projects will be supported under this category.

These projects are eligible for a 20 percent capital subsidy, capped at INR 80 million per kiloton of annual capacity, along with enhanced land registration and stamp duty reimbursements.

A key feature of the policy is the promotion of integrated green hydrogen hubs, defined as geographically concentrated zones where hydrogen production, storage, transportation, and end-use coexist with shared infrastructure.

The policy provides capital subsidies of up to INR 350 million per hub for a limited number of projects. Each hub must have a minimum hydrogen production capacity of 3 kilotons per annum, host at least ten industrial units, and include at least one green hydrogen production unit. Coastal and port-adjacent regions have been identified as priority areas to support exports.

To stimulate demand, the policy introduces several consumption-side incentives. A 30 percent capital subsidy, capped at INR 40 million per unit, is offered for setting up the first 20 green hydrogen refuelling stations for vehicles, ships, and vessels, with each beneficiary eligible for up to three stations.

For public transport, GSRTC, PSUs, and urban local bodies can avail a 30 percent capital subsidy up to INR 5 million per vehicle for procuring the first 500 green hydrogen-powered passenger buses. A similar incentive structure applies to the first 100 green hydrogen-based heavy-duty on-road and off-road vehicles procured by state entities and PSUs.

Registered MSMEs operating in Gujarat are eligible for a reimbursement of INR 50 per kilogram of green hydrogen consumed for a period of five years, subject to an overall cap of INR 2.5 billion and INR 25 million per MSME. Comparable incentives are available for city gas distribution companies blending green hydrogen with CNG or PNG.

The policy outlines facilitation measures including priority industrial land allocation through the Gujarat Industrial Development Corporation, coordination for water supply and desalination infrastructure, and development of dedicated green energy corridors. It also confirms that no electricity duty is currently levied on renewable energy consumption under Gujarat law.

Green hydrogen equipment manufacturing, including electrolysers and components, is classified as an eligible industry under existing state industrial policies. Dedicated manufacturing clusters with time-bound clearances may be developed. The state has earmarked INR1 billion for research and development, centres of excellence, environmental studies, and startup incubation related to green hydrogen technologies.

Implementation will follow a three-tier governance structure, with an Apex Committee chaired by the Chief Minister, an Executive Committee overseeing approvals and incentives, and Gujarat Power Corporation designated as the nodal agency for registration, monitoring, and single-window clearances.

Projects availing benefits under other Gujarat policies, including the Gujarat Waste Land Allocation Policy for Green Hydrogen Production, 2023, will not be eligible for incentives under this policy. The government has retained the right to review or amend the policy after two years, or earlier if required, to address technological or implementation challenges.