MAKE IN INDIA-Green Hydrogen- India’s Sunrise Sector

Green Hydrogen- India’s Sunrise Sector

By Kanika Verma, Strategic Investment Research Unit (SIRU)

The thing that is going to help India with a quantum leap in terms of climate is the field of green hydrogen1,” – Prime Minister Narendra Modi.

Hydrogen has been an upcoming sector across the globe with huge industrial applications. Increasing number of companies across the globe are now exploring green hydrogen. Green hydrogen has been labelled as one of the cleanest forms of energy in the world. It is being looked at as the ultimate solution to achieve net zero emissions. Through the process of electrolysis, all that is needed to produce hydrogen is water, a big electrolyser and electricity. The electric current then splits the water into its two components- hydrogen and oxygen. This means no release of greenhouse emissions since oxygen is the only by-product of this process. Additionally, if the electricity used comes from renewable sources, it makes the process completely emission free.

In line with India’s ambitious green commitments, Prime Minister Narendra Modi aims to transform India into an energy independent nation by 2047 where green hydrogen will play an active role as an alternate fuel to petroleum/ fossil-based products.

To keep pace with global companies, the National Hydrogen Mission was announced in the Budget Speech of FY 2021-22 to produce hydrogen from green energy sources. The scheme was announced putting Green Hydrogen at the heart of India’s energy security and climate change.

According to a report by TERI, in 2020, India’s hydrogen demand stood at 6 million tons (MT) per year.2 However, studies have shown a tremendous opportunity for growth in this area. It is estimated that by 2030, the hydrogen costs will be down by 50 per cent.3 The demand for hydrogen is expected to see a 5-fold jump to 28 MT by 2050 where 80 percent of the demand is expected to be green in nature.4 Many Indian companies have already started announcing their plans to dip their toes in the green energy sub-sector.

Recently, India’s largest oil and gas sector company, Reliance Industries Ltd (RIL) has announced its plans to go green. The company has recently announced its plans to become a net zero carbon firm by 2035. RIL has plans to invest INR 600 billion to build a 5000-acre green energy complex in Jamnagar, Gujarat.5 The complex will house an electrolyser plant to produce green hydrogen.

GAIL (India), a Public Sector Undertaking (PSU) has floated a recent tender to procure an electrolyser. They are looking at locations to finalise a 10 MW plant, one of the biggest plants announced so far.6 GAIL has taken a step forward and has already started mixing hydrogen in natural gas on a trial basis in one of the cities. Similarly, NTPC has also shown interest in producing green hydrogen on a commercial scale. They have expressed their plans to do the same from its 4.75 GW park at the Rann of Kutch and have announced a 5 MW7 plant. Presently, the company is running a pilot in their Vindhyachal unit. Further the company also has plans to set up a green hydrogen fuelling station in Leh, Ladakh and will start with plying 5 hydrogen buses. They have invited Expression of Interests (EOIs) for 10 hydrogen fuel cell buses and cars.8

Indian Oil Corporation Limited (IOCL) is another PSU that has announced its plans to explore the green hydrogen opportunity. They recently announced their plans to setup a green hydrogen plant at their Mathura refinery in Uttar Pradesh with a capacity of around 160,000 barrels per day.9 Acting firmly on their target to convert at least 10 percent of its hydrogen consumption at the refineries to green hydrogen, they plan to convert 10 percent of the usage in their Mathura location to green sources by the year 2024. IOCL also has plans to set up a hydrogen manufacturing unit in Kochi, which is targeted to draw energy from the solar facility at the Kochi international airport. Additionally, IOCL floated a tender for 15 hydrogen PEM fuel cell electric buses .

Larsen and Tourbo (L&T) is another Indian entity looking to venture into the green hydrogen sector. According to their latest report, they have set an aim to achieve net zero emissions by 2040 and plan to spend INR 10-15 Bn on its green initiatives. In addition to exploring the possibility of manufacturing electrolysers, they are setting up a green hydrogen plant at their Hazira complex, which is scheduled to be completed within this financial year.

Both Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) are planning to use hydrogen for its refineries. Furthermore, Solar Energy Corporation Limited (SECI), is looking to invite bids to build green hydrogen plants using renewable energy sources.The corporation recently released a Notice Inviting Tenders (NIT) for setting up a Green Hydrogen based pilot project at SNM hospital in Leh, Ladakh.

Establishing India as a global hub for green hydrogen generation, Ohmium International through its subsidiary in India has shipped its first ever unit of electrolyser to the United States. The electrolyser was manufactured in Ohmium’s Bengaluru facility which is India’s first green hydrogen electrolyser Gigafactory.16

India’s journey into the green hydrogen space has been path breaking. As of now, the industry faces high cost of production but owing to increased demand, technology upgradation and strong government support, the industry will soon establish economies of scale, driving down the cost. In line with India’s Make in India initiative and its net zero emission targets, the sector provides tremendous scope for growth and investments.

India - a biotech growth catalyst

India is among the top 12 destinations for biotechnology in the world, with approximately 3% share of the global biotechnology industry. The sector is a key contributor to India’s vision of reaching a $ 5 Trillion economy by 2024.

The sector plays a key role in the global vaccine market, as the leader in the global supply of DPT, BCG, and measles vaccines, and is also a key contributor of 70% of WHO’s vaccines (essential Immunization Schedule). India also ranks 48th on the Global Innovation Index.

• The Indian biotech industry comprises of over 5,000 companies (760 core companies and 4,240 start-ups) and is aligned around five major segments: BioPharma, BioAgriculture, BioIndustrial, and combined segment of BioServices comprising of BioIT, CROs, and Research Services.

• The Indian biotechnology industry is forecast to reach $150 billion by 2025, with a CAGR of 16.4%

• 12.3% year on year growth (FY20 to FY19)

• Over 4237 biotech startups, expected to reach 10,000 by 2025

• 760+ core biotech companies, 200+ Biotech products

• Rising contribution to national GDP (2.7% in 2020 against 2.2% in 2019)

India led the world into Biosimilar Innovation and became the 1st country to approve and market a biosimilar in 2000 with over 98 biosimilars approved (till September 2019), which is the highest in the world

100% FDI is allowed under the automatic route for greenfield pharma.

100% FDI is allowed under the government route for brownfield pharma in upto 74% FDI which is under automatic route and beyond 74% is under the government approval route.

FDI up to 100% is allowed under the automatic route for the manufacturing of medical devices.

Food processing - 'A sunrise sector'

India's food ecosystem offers huge opportunities for investments with stimulating growth in the food retail sector, favorable economic policies, and attractive fiscal incentives.

Through the Ministry of Food Processing Industries (MoFPI), the Government of India is taking all necessary steps to boost investments in the food processing industry in India. The government has sanctioned 41 food parks funded under the Mega Food Parks Scheme of which 38 have final approval. In 2014, there were only 2 Mega Food Parks in the country. As of 1 August 2021 there are 22 Mega Food Parks functioning in the country. Now the target is to take their number to more than 40.

India recorded close to 15% rise in export of agricultural and processed food products in April- October.

• By 2025, India’s food processing industry is expected to be worth over half a trillion dollars.

• By 2030, Indian annual household consumption to treble, making India fifth largest consumer

100% FDI is permitted under the automatic route in food processing industries in India.

100% FDI is allowed through the government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.

SOURCE: Invest India, National Investment Promotion & Facilitation Agency, Government of India