Experts Push For Customs Duty Reduction To Drive Green Hydrogen Production

New Delhi, Jan 8 (KNN) Renewable Energy industry experts have recommended that the government should reduce customs duty on capital items, including solar modules, in an effort to enhance the commercial viability of Green Hydrogen production in India.

Experts highlight that the import of renewable energy devices such as solar modules faces significant customs duties and taxes, creating a competitive disadvantage for the establishment of Green Hydrogen facilities, as reported by FE.

Lowering these customs duties would also assist small and medium enterprises in adopting environment-friendly alternatives.

As of now, India possesses a solar photovoltaic cell manufacturing capacity of 3 gigawatts (GW), with a significant portion of module manufacturing relying on imports.

Currently, the effective tax rate, encompassing customs duty on imported solar modules, exceeds 60 per cent. This elevated tax burden is then transferred to output prices, rendering Green Hydrogen or its derivatives non-competitive in the market.

Experts project that over 50 per cent of the total expenditure for establishing a green hydrogen facility is attributed to the setup cost of a renewable energy plant.

Additionally, the overall tax cost of an RE plant is estimated to be approximately 30 per cent.

In January 2023, the government introduced the 'National Green Hydrogen Mission' with a budget of Rs 19,744 crore.

The mission aims to establish a Green Hydrogen production capacity of at least 5 million metric tons per annum by 2030, coupled with an associated renewable energy capacity addition of approximately 125 gigawatts.

To achieve this goal, the National Green Hydrogen Mission requires various capital items, including feedstock and electrolysers, in addition to renewable energy.

Furthermore, substantial investments are necessary for establishing adequate storage mechanisms, transportation pipelines, and implementing robust safety systems in Green Hydrogen production facilities.

(KNN Bureau)