Green Ammonia in India: Risks Behind the Ammonia Gold Rush and How to Succeed

Takeaways 

• Production of Ammonia in India is tied with the country's hydrogen mission, targeting 5 MMT of green hydrogen by 2030 and building a domestic and export market. 
• India’s “ammonia gold rush” comes from strong renewables, a large fertiliser sector, and export ambitions, but real-world execution is challenging. 
• Winning tender bids rely on overly optimistic cost assumptions, with green ammonia in India priced at ~$650/MT only if everything performs perfectly. 
• Electrolyser efficiency is the key driver of project viability, as energy costs dominate hydrogen production economics. 
• India faces a major electrolyser supply chain gap, with critical components like electrodes and membranes still mostly imported. 
• Small efficiency losses can destroy project economics, turning plants unviable long before stack replacement cycles. 
• Technical due diligence is essential, focusing on lifecycle efficiency, degradation, and performance under renewable intermittency. 
• True localisation requires real technology transfer, not just assembling imported electrolyser components. 
• The right partner is crucial, with strong technology, efficiency, manufacturing capacity, and export readiness being the differentiators. 

About the author

Aniket Choudhari is the Senior Manager of Business Development at Stargate Hydrogen. With a decade of experience in the Indian energy landscape, he worked on techno-commercial for electrolyser and fuel cell technologies, supporting their deployment across industries.

Aniket spent years in the automotive sector and served as the Manager for International Investment Promotion for a German region in India, where he facilitated cross-border investments, industrial collaborations and technology partnerships. He holds a master’s degree in Process Engineering and Energy Technology from the University of Applied Sciences Bremerhaven, Germany. 

Why Green Ammonia in India?

Ammonia (NH₃) is a well‑known chemical: a combination of nitrogen and hydrogen widely used in fertiliser (especially urea) and many industrial applications (refrigeration, chemicals, etc). Traditional ammonia is mostly produced from fossil fuels, natural gas (or coal) via steam‑methane reforming + the Haber‑Bosch process. It is called grey ammonia, and it results in significant CO₂ emissions.  

But there are other better options on how to produce ammonia. Known as green ammonia, this variant is produced using hydrogen generated via water electrolysis powered by renewable energy, plus nitrogen from the air; the aim is near‑zero or much reduced CO₂ emissions. 
 

Policy & Strategy for Green Ammonia in India

Launched in January 2023 by the Ministry of New and Renewable Energy (MNRE), the National Green Hydrogen Mission (NGHM) sets a bold target for India: to produce 5 million metric tons of green hydrogen annually by 2030. The scope of the mission includes not just the production of green hydrogen itself, but also key derivatives such as green methanol and green ammonia in India, recognising their importance in decarbonising industrial sectors and supporting export strategies. 

To drive demand, the mission includes a provision requiring designated consumers, such as large industrial users, to incorporate a minimum share of green hydrogen or its derivatives into their energy or feedstock mix. This demand-side mandate aims to build a stable domestic market and provide certainty for project developers. 

Financial backing is provided through the SIGHT (Strategic Interventions for Green Hydrogen Transition) scheme, which has earmarked approximately ₹17,490 crore (around USD 2.1 to 2.4 billion) through 2029–30. These funds will support the manufacturing of electrolysers and the production of green hydrogen, forming the backbone for producing green ammonia in India. 

India also has global ambitions. The government aims to capture 10% of the world’s green hydrogen market and eventually export up to 10 million metric tons per year of hydrogen and its derivatives, including the production of green ammonia in India, after 2030. Falling renewable energy costs and reforms such as waived interstate transmission charges and improved open access regulations strengthen India’s competitive position, potentially enabling green hydrogen and ammonia production at globally attractive prices. 

Why Is Ammonia in India Being Rehyped?

Historically, ammonia was a mature commodity chemical with incremental growth. But now, ammonia is part of the broader energy‑transition conversation: as a hydrogen carrier, an export commodity, and a decarbonisation tool for industries that are difficult to electrify. 

India’s ammonia “gold rush” narrative arises from combining its renewable energy endowment, existing ammonia industry, large domestic fertiliser market, and export potential. However, the shift from hype to reality is not automatic. The promise of green ammonia in India faces technical, regulatory, and commercial obstacles that must be considered.  

Historically, ammonia in India is consumed in large quantities, approximately 19 million metric tons (MMT) annually. This consumption level equates to roughly 3.35 MMT of grey hydrogen, given that traditional ammonia production relies heavily on hydrogen derived from natural gas or coal. Notably, about 89% of this ammonia demand has been met through domestic production, reflecting a relatively self-reliant industrial base supported by a mature fertiliser sector. 

India still relies on imports to fill the remaining supply gap, with key ammonia shipments originating from countries such as Oman, Saudi Arabia, Indonesia, Qatar, and Malaysia. These international suppliers help stabilise the market during demand surges or supply shortfalls, but they also highlight India’s exposure to global price fluctuations and logistical dependencies. 

The emerging opportunity for producing green ammonia in India is largely tied to improving cost competitiveness. One policy-driven advantage is the waiving of interstate transmission charges for renewable electricity. This measure significantly reduces the cost of powering electrolysers, crucial for generating green hydrogen, which is the foundation of green ammonia. These cost-saving mechanisms position India to potentially produce green ammonia more competitively than many other markets. 

The Green Ammonia Indian Market: Current State & Recent Progress  

There is significant variation in market size estimates across sources. 

All sources of projects have shown growth, but the rate and size differ. These discrepancies highlight that the traditional ammonia/urea segment is mature and likely to grow modestly; the big growth thesis lies in green‑ammonia/derivative use (hydrogen carrier, export, etc). 

The first euphoria of India’s Green Hydrogen Mission is settling into the hard reality of execution. The historic price discovery seen in the SECI (Solar Energy Corporation of India) tenders under the SIGHT scheme was hailed as a victory for the sector. With incentives capped and aggressive bidding from major players, then, India declared itself open for business. 

However, beneath the headlines of "lowest cost ammonia in India," a dangerous disconnection appears between financial spreadsheets and technical reality. For developers chasing the green ammonia gold rush, the margin for error is not just thin; it is microscopic. 

The Math Doesn’t Lie: A Reverse Engineering of the "Winning" Bid 

To understand the risk, we must look beyond the incentive amount and analyse the Levelized Cost of Ammonia (LCOA) needed to make these projects bankable. Let's take a representative analytical look at a tender-winning scenario (based on market data from 2024-2025. 

The Scenario: 

A developer secures an offtake agreement or targets a strike price for producing Green Ammonia in India at $650 USD per Metric Tone (MT) to remain competitive against grey ammonia imports (which fluctuate but anchor the market). 

The Backward Calculation: 

To produce 1 MT of Ammonia (NH3), you need approximately 177 kg of Hydrogen. 

The Ammonia Cap: $650/MT 

Less Balance of Plant (Haber-Bosch, Storage, Logistics): Conservatively ~$150 - $180/MT. 

Remaining Budget for Hydrogen: ~$480 USD for 177 kg. 

Target LCOH (Levelized Cost of Hydrogen): $2.71/kg. 

The Electrolysis Trap: 

Achieving an LCOH of $2.71/kg in India is theoretically possible, but it assumes flawless execution. Let’s break down the input costs: 
 

Renewable Energy Cost (Landed): ~INR 3.50/kWh (optimistic blend of Solar/Wind + Banking). 

Target Electrolyser Efficiency: 52 kWh/kg (System level). 

Energy Cost alone = 52 kWh x INR 3.50 = INR 182/kg ( approx $2.16 USD). 

The Problem: 

Suppose the energy cost is $2.16 and your target LCOH is $2.71. In that case, you have only $0.55/kg left to cover the entire CAPEX recovery of the electrolyser, water treatment, compression, and project finance costs. 

This financial model relies on two extremely risky assumptions: 

1. CAPEX Collapse: The electrolyser stack costs will plummet below $350/kW at once. 

2. Efficiency Stability: The electrolyser will maintain roughly 52 kWh/kg efficiency over its lifetime. 

The "Hidden" Degradation Tax: 

If the electrolyser stack degrades faster than expected, efficiency drops to 58 kWh/kg by Year 3 due to poor electrode durability, and the energy cost jumps to $2.41/kg. Your margin for CAPEX recovery vanishes. The project becomes a Non-Performing Asset (NPA) before the first stack replacement cycle. 

The conclusion: "Made in India" Paradox 

While the tenders incentivise local manufacturing, the Indian electrolyser ecosystem is facing a severe "Component Void." We are seeing a rush to assemble, but a struggle to manufacture core technology. 

The aggressive bids assume a robust local supply chain that does not yet exist at scale. As of late 2025, while we have announced gigafactories, the upstream reality is concerning: 

Electrodes: High-performance electrodes (the heart of efficiency) require advanced catalytic coatings. Domestic availability of sustained, high-current density electrodes is low, forcing reliance on imports that are subject to geopolitical price fluctuations. 

Membranes & Diaphragms: For Alkaline and PEM alike, the highest quality separators are still dominated by a handful of global suppliers (largely in Europe, Japan, and China). There is virtually no scaled domestic champion for high-durability membranes in India yet. 

Cell Frames & Bipolar Plates: Precision machining or moulding of cell frames to handle high pressures (30 bar+) without leakage requires advanced material science (e.g., specific nickel-plated steel or advanced composites). Local sourcing often compromises on tolerances to cut costs, leading to gas crossover risks and lower purity. 

This supply chain gap creates a Forex Exposure Risk. If 60% of the "Indian" electrolyser’s BOM (Bill of Materials) is imported sub-components, the LCOH is at the mercy of currency exchange rates, not just the cost of green electricity. 

How to Survive the Shakeout 

The companies that will survive and thrive in producing green ammonia in India won’t be those chasing the lowest upfront costs. The real winners will be the ones who build around strong technical due diligence and make decisions based on total project resilience. That means thinking beyond early-stage metrics and focusing on long-term viability. 

Prioritise OPEX over CAPEX 

It’s tempting to squeeze the budget by trimming capital costs, but for producing green ammonia in India, operational efficiency drives survival. A 10% reduction in CAPEX may offer limited relief, but a 5% improvement in electrolyser efficiency (measured in kWh/kg) can determine whether a project makes it past commissioning. Developers must move away from procuring nameplate capacity in kilowatts and start evaluating suppliers based on lifecycle efficiency, degradation profiles, and total cost of hydrogen over time. 

Verify the Stack DNA 

India’s renewable profile is intermittent, with solar and wind fluctuations that challenge most legacy electrolyser stacks. Standard alkaline stacks typically degrade faster when forced to ramp output frequently. Success demands next-generation stack technology, including electrode innovations, durable active materials, and high current density capability without trade-offs in longevity. Anything less risks unplanned downtime, higher maintenance, and escalating replacement costs. 

Localise with Purpose 

Genuine localisation isn’t just about assembling imported kits in-country. It’s about building a self-sustaining ecosystem with knowledge transfer at its core. At Stargate Hydrogen, localisation includes working with Indian partners to develop and eventually manufacture key components, accelerating time-to-market, reducing logistics risk, and strengthening supply resilience. It’s a commitment to building capability, not just fulfilling policy requirements. 

Choose the Right Partners 

In the market of green ammonia in India, the biggest risk isn’t always technical; it’s choosing a partner that can’t deliver beyond the spec sheet. The difference between a stalled initiative and a market-ready export hub often comes down to execution depth and local alignment. 

A strong partner isn’t just a technology provider. They bring a bundle of strategic assets: 

Headquartered in Estonia, Stargate Hydrogen develops next-generation alkaline electrolysers designed to meet the efficiency, durability, and cost challenges of green hydrogen production. Its ceramic-based catalyst technology removes dependence on precious metals, making it ideal for price-sensitive projects like those in India. 

Just as important, Stargate understands the demands of project execution. The company supports green hydrogen use in hard-to-abate sectors like fertilisers, aligning directly with India's industrial decarbonisation goals. Through collaborative localisation and end-to-end technical support, Stargate isn't just supplying hardware; it is helping developers survive the market shakeout. 

In June 2025, Stargate opened its new electrolyser factory in Tallinn with an initial capacity of 140 MW per year, scalable to over 1 GW. The company has already begun supplying units to projects in India and the Middle East.  
 
The product line includes not only the electrolyser stacks Stellar Edge 0.5 MW and The Starbase 5 MW, but also the containerised electrolyser systems, the Gateway 200 with 1 MW and the Aurora with 10MW. These are especially suited to India’s phased project deployment strategies, where initial capacity may need to scale over time in response to offtake contracts or infrastructure progress. 

"We have chosen a different strategy, scaling up modularly to meet the growing demand as it rises and when our next-generation innovations are launched on the market,"

Marko Virkebau, CEO of Stargate Hydrogen. 

For Indian developers, the message is clear: choosing a partner like Stargate Hydrogen, one that brings technical capability, commercial realism, and export fluency, can tilt the odds of project success in their favor. 

Green Ammonia in India - Conclusions 

The "Ammonia Gold Rush" is real, but the gold isn't in the ground; it's in the efficiency of the stack. The historic price discovery of the last two years has set a high bar; to overcome the new price, companies will need to start moving beyond financial engineering and addressing the physics of electrolysis and the reality of supply chains. We are talking about real R&D.  

The ambitious production of green ammonia in India is grounded in real strengths: a large ammonia sector, abundant renewables, and supportive policies. But momentum comes with challenges; in this environment, choosing a partner who takes R&D seriously is key.   

The winners will be those who respect the molecule as much as the money. Stargate Hydrogen, with its proven technology, manufacturing capacity, and regulatory insight, can help Indian firms reduce risk and stay competitive. 

If you’re exploring green ammonia in India, whether for fertiliser feedstock, export supply, or hydrogen‑carrier use, don't hesitate to get in contact with our business development team.