Policy Update
Vibha Sethi
A Strategic Policy Update on Decarbonizing Hard-to-Abate Sectors and Recalibrating National Income Accounting Frameworks.
Background
Traditional economic growth metrics have long faced criticism for overlooking environmental externalities, resource depletion, and ecological degradation. In India, the conventional Gross Domestic Product (GDP) framework captures financial transactions but treats the consumption of finite natural capital as income rather than capital depreciation. To bridge this gap, the concept of Green GDP has emerged—adjusting traditional national output by subtracting the monetary costs of environmental damage and depletion of natural assets.
The systemic push toward green accounting gained legislative and institutional momentum following the framework recommendations of the Sir Partha Dasgupta Expert Group Report (2013) commissioned by the Ministry of Statistics and Programme Implementation (MoSPI). Concurrently, India has updated its macroeconomic benchmarking, deploying the New Series of National Accounts Statistics (Base Year 2022-23). This series incorporates wider corporate and statutory data registries, establishing fertile ground for satellite environmental accounting.
As India targets Net-Zero emissions by 2070 and 500 GW of non-fossil fuel electricity capacity by 2030, clean energy deployment has shifted from peripheral sub-sectors to the core macro-fiscal architecture. The crown jewel of this transition is the National Green Hydrogen Mission (NGHM), approved by the Union Cabinet in January 2023 with an initial corpus allocation of ₹19,744 Crore. The NGHM serves as an operational blueprint to materialize Green GDP aspirations by decarbonizing heavy industrial sectors, thereby protecting India’s domestic natural capital asset base.
Functioning
The execution of the National Green Hydrogen Mission and its integration into the Green GDP accounting framework operates through a matrixed institutional structure involving multiple nodal ministries:
- Strategic Interventions for Green Hydrogen Transition (SIGHT): Administered by the Ministry of New and Renewable Energy (MNRE), the SIGHT programme functions via two distinct financial incentive mechanisms—one targeting the domestic manufacturing of high-efficiency electrolyzers and the other subsidizing direct Green Hydrogen production.
- Sectoral De-carbonization Pathways: The operational framework utilizes dedicated pilot allocations across deep-tech industrial applications. The Ministry of Steel has been provisioned under the mission to integrate hydrogen in Direct Reduced Iron (DRI) processes. Simultaneously, the Ministry of Ports, Shipping and Waterways, and the Ministry of Road Transport and Highways oversee maritime and heavy-mobility pilot iterations.
- Green National Accounting Framework: MoSPI functions as the analytical custodian, developing the System of Environmental-Economic Accounting (SEEA) framework. By generating “Supply and Use Tables” for carbon emissions and natural resources, MoSPI links satellite ecosystem accounts directly into the core asset ledgers of the national income series.
- State-Level Compliance & Portals: To maximize ease of doing business, the central framework relies on cooperative federalism. As of June 2026, six major states—Maharashtra, Rajasthan, Uttar Pradesh, West Bengal, Gujarat, and Uttarakhand have launched dedicated state-level policies, bolstered by the newly operationalized Green Hydrogen Certification Portal of India (GHCI) to monitor regulatory compliance.
Source: Chart constructed based on official data from the National Green Hydrogen Mission, Ministry of New and Renewable Energy (MNRE), Government of India.
Performance
The performance trajectory toward the 2030 roadmap reflects robust foundational progress in capacity awards, matched against heavy infrastructural scaling challenges.
Table 1: Target Dimensions vs. Present Operational Status (MNRE 2030 Objectives)
| Performance Metric Dimension | Target Specified for 2030 | Present Operational & Awarded Status (as of 2026) |
| Annual Green Hydrogen Capacity | At least 5 Million Metric Tonnes (MMT) | ~8,62,000 tonnes per annum capacity already awarded |
| Electrolyzer Manufacturing Tenders | 15 GW National Electrolyzer Capacity | 3,000 MW per annum manufacturing capacity awarded |
| Associated Renewable Integration | ~125 Gigawatts (GW) of RE Capacity | Integrated into the wider 500 GW non-fossil capacity pipeline |
| Commercial Off-take Agreements | Hard-to-Abate Sector Substitution | SECI signed 10-year contracts for 7,24,000 MTPA green ammonia supply |
| Infrastructure & Hub Outlays | Multiple Green Hydrogen Hubs | ₹400 Crore allocated; low-carbon steel (₹455 Cr) & mobility pilots active |
Source: Compiled from Ministry of New and Renewable Energy (2023, 2024) scheme announcements and Press Information Bureau (2024) project award databases.
In physical milestones, public sector undertakings have successfully piloted operational infrastructure, such as Oil India Limited’s pure green hydrogen plant in Jorhat and NTPC’s piped natural gas blending trials. Structurally, while over 90% of the targeted 2030 capacity has entered initial project proposal announcements, around 3% is currently active or under immediate construction, necessitating an aggressive acceleration in midstream capital deployment.
Impact
The confluence of Green GDP implementation and NGHM optimization exhibits profound structural impacts across India’s macroeconomic, environmental, and socio-industrial spectrum.
- Macroeconomic Insulation and Import Substitution India remains heavily dependent on crude oil and natural gas imports, causing substantial exposure to global supply-chain shocks. By successfully producing 5 MMT of green hydrogen annually by 2030, the nation will achieve a cumulative reduction of over ₹1 Lakh Crore (€11.4 Billion) in fossil fuel import bills (Ministry of Finance [MoF], 2024). This massive capital retention directly strengthens the current account balance, freeing up fiscal space for domestic sovereign investments.
- Environmental Natural Capital Preservation From a Green GDP accounting perspective, the primary benefit is the reduction of environmental degradation costs. The mission guarantees the abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030. By substituting grey hydrogen (derived from natural gas) with green hydrogen in fertilizer plants and petroleum refineries, India prevents the rapid depletion of air quality and ecological balance indices tracked under MoSPI’s EnviStats mandates.
- Employment Generation and Capital Influx
The roadmap acts as an industrial multiplier, projected to attract more than ₹8 Lakh Crore ($90+ Billion) in total capital investments by the turn of the decade (Ministry of New and Renewable Energy [MNRE], 2024). This macroeconomic expansion is expected to generate over 6,000,000 clean energy jobs, creating an advanced, highly specialized domestic workforce in electrolyzer engineering, cryogenic storage, and green ammonia logistics.
Emerging Issues
Despite institutional backing, several structural roadblocks threaten the execution timeline of the 2030 roadmap:
- The Cost Asymmetry Gap: The current production cost of green hydrogen stands relatively high. Lowering this to the target benchmark of $1.50 per kg (€1.37/kg) requires ultra-low-cost renewable energy inputs and exponential economies of scale in local electrolyzer manufacturing.
- Severe Water Intensity Stresses: The electrolysis process is deeply water-intensive, requiring approximately 9–11 liters of high-purity demineralized water per kilogram of hydrogen produced. Concentrating these mega-projects in renewable-heavy states like Rajasthan and Gujarat—which face perennial water scarcity—poses severe local ecological and resource-allocation issues.
- Midstream Supply Chain Deficits: Production alone cannot guarantee viability without safe storage and transportation. Developing specialized pipeline infrastructure, cryogenic storage terminals, and optimizing hydrogen-carrying molecules (like green ammonia) at major ports requires separate, highly intensive capital allocation.
Way Forward
To harmonize Green GDP milestones with the National Green Hydrogen Mission, India must implement a multi-pronged strategic realignment that directly systematically neutralizes the identified roadblocks:
- Overcoming Cost Asymmetries via Fiscal Accounting: To counter high initial capital expenditures, MoSPI must fully codify the integration of SEEA satellite accounts into the newly established 2022-23 Base Year GDP Series. By creating a framework where environmental asset degradation carries financial weight, the government can offer structural tax credits and green subsidies that actively lower the capital burden for early adopters.
- Eliminating Midstream Infrastructure Bottlenecks: To resolve high transportation costs and logistical delays, infrastructural outlays must prioritize the accelerated rollout of Hydrogen Valley Innovation Clusters (HVICs). Co-locating production infrastructure directly adjacent to high-demand industrial consumers—like refineries and steel plants—will completely eliminate midstream transportation overheads and build localized supply networks.
- Securing Domestic Off-Take Certainty: To address the lack of commercial long-term viability for private investors, India must enforce structural mandate policies. Implementing mandatory minimum green hydrogen consumption quotas for hard-to-abate sectors (such as chemicals, oil refineries, and fertilizers) will establish a highly predictable domestic off-take ecosystem, assuring private equity of long-term commercial visibility.
- Mitigating Global Supply Risks via Strategic Logistics: To insulate the domestic ecosystem from international supply line vulnerabilities, India must leverage proactive green diplomacy. Actively optimizing international multi-modal trade infrastructure, specifically through the India-Middle East-Europe Economic Corridor (IMEC), will secure resilient technology transfer pipelines and simultaneously position India as a highly competitive exporter of green molecules to hyper-demand global markets
References
About the Contributor
Vibha Sethi is a researcher and policy enthusiast with interests in public policy, governance, international relations, trade frameworks, and strategic studies. Her work focuses on evidence-based policy analysis, geopolitical developments, and emerging global challenges, with particular attention to India’s strategic, economic, and developmental priorities. She is actively engaged in analytical writing, policy research, and academic discussions related to governance, security, and international affairs.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
Acknowledgement
The author extends sincere gratitude to the IMPRI team for their expert guidance and constructive feedback throughout the process.
Reviewers
Pritha Chowdhury and Saachi Saxena
