Industry urges customs duty cuts for green hydrogen viability in India

  • Industry News
  • Jan 09,24
Renewable energy devices such as solar modules face substantial customs duties and taxes upon import, rendering the establishment of Green Hydrogen facilities economically uncompetitive, according to experts.
Industry urges customs duty cuts for green hydrogen viability in India

In a bid to make the production of Green Hydrogen economically viable in India, industry stakeholders have suggested that the government reduce customs duty on essential capital items, including solar modules.

Renewable energy devices such as solar modules face substantial customs duties and taxes upon import, rendering the establishment of Green Hydrogen facilities economically uncompetitive, according to experts.

Presently, India's solar photovoltaic cell manufacturing capacity is at 3 gigawatts (GW), with a significant portion of module manufacturing relying on imports. The cumulative tax rate, encompassing customs duty on solar module imports, exceeds 60%, leading to elevated output prices that render Green Hydrogen and its derivatives non-marketable.

Experts emphasise that more than 50% of the setup cost for a Green Hydrogen facility is attributed to the renewable energy plant, with the overall tax cost standing at approximately 30%.

To foster the viability of Green Hydrogen manufacturing in India, experts propose offering customs duty concessions on capital items crucial for establishing an integrated Green Hydrogen facility for a duration of 2-3 years.

In January 2023, the government introduced the 'National Green Hydrogen Mission' with an allocation of Rs 19,744 crore, aiming to develop a Green Hydrogen production capacity of at least 5 MMT per annum by 2030, accompanied by an increase in renewable energy capacity to about 125 GW.

To achieve these ambitious targets, the setup of a Green Hydrogen production facility requires various capital items, such as feedstock, feedwater, and electrolyser, in addition to substantial investments in storage mechanisms, transportation pipelines, and safety systems.

In light of the government's aggressive Green Hydrogen generation goals, suggestions include the elimination of the Approved List of Models and Manufacturers (ALMM), introduced in 2021 as a non-tariff barrier to promote domestic manufacturing. Furthermore, experts propose the provision of export incentives, the establishment of dedicated zones, and tax incentives to bolster the National Green Hydrogen mission in India.

Source: The Financial Express

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