L&T's Strategic Expansion into Green Hydrogen: A Catalyst for India's Clean Energy Transition

In the race to decarbonize global economies, India's green hydrogen revolution has emerged as a pivotal battleground. At the forefront of this transition stands Larsen & Toubro (L&T), a conglomerate leveraging its engineering prowess and strategic foresight to build an integrated green hydrogen ecosystem. With India targeting 5 million metric tons (MMT) of green hydrogen production annually by 2030, L&T's investments in infrastructure, partnerships, and innovation position it as a linchpin in the nation's energy transformation.

A Vision Aligned with National Ambitions

L&T's foray into green hydrogen began in 2024 with the establishment of dedicated subsidiaries—Panipat Green Hydrogen Pvt Ltd and L&T Green Energy Kandla Pvt Ltd—to drive green hydrogen and ammonia projects. These entities are not mere extensions of the company's traditional engineering capabilities but are designed to anchor India's transition to a low-carbon economy. The Kandla project in Gujarat, for instance, is a testament to L&T's commitment to scalable solutions. Securing land in a region with abundant renewable energy potential, the project aligns with India's National Green Hydrogen Mission (NGHM), which aims to make the country a global green hydrogen hub.

L&T's Hazira plant, operational since 2025, already demonstrates the company's technical acumen. Equipped with an 800 kW electrolyser (combining alkaline and PEM technologies) and a 990kW rooftop solar array, the plant produces 15 tonnes of high-purity hydrogen annually. Plans for a 400 kW PEM electrolyser expansion will double output to 30 tonnes, underscoring L&T's capacity to scale. This infrastructure not only supports internal decarbonization—such as hydrogen blending with natural gas for captive consumption—but also positions the company to supply green hydrogen to industrial clusters and export markets.

Strategic Partnerships and Policy Synergy

L&T's growth trajectory is bolstered by partnerships that amplify its technological and operational reach. In March 2025, its subsidiary L&T Energy GreenTech signed an MoU with John Cockerill to explore concentrated solar power and thermal energy storage, addressing the intermittency challenges of renewable energy. Additionally, L&T's U.S. approval for small modular reactor (SMR) technology transfer—a rare achievement for Indian firms—opens avenues for hybrid energy systems that could stabilize green hydrogen production.

India's policy framework, including the SIGHT program and ₹2.39 billion in budgetary allocations for green hydrogen, creates a fertile ground for L&T's initiatives. The government's exemption of inter-state transmission charges for green hydrogen plants and open access to the grid further reduce operational costs, enhancing the financial viability of L&T's projects. These incentives are critical, given the sector's capital-intensive nature and long gestation periods.

Competitive Landscape and Risk Mitigation

While L&T's ambitions are formidable, it faces stiff competition from industry giants like Reliance Industries, Adani Green Energy, and Indian Oil Corporation (IOCL). Reliance's 3 GW green hydrogen project in Gujarat and IOCL's 10,000-tonne-per-annum plant at Panipat highlight the scale of rival investments. However, L&T's edge lies in its integrated ecosystem: from electrolyser manufacturing to EPC execution, the company controls critical value-chain segments. This vertical integration reduces reliance on external suppliers and ensures cost efficiency—a key differentiator in a sector where electrolyser prices remain volatile.

Risks, however, are inherent. High capital expenditures, regulatory uncertainties, and technological bottlenecks could delay timelines or inflate costs. For example, the cost of renewable energy and electrolyser technology must decline further to make green hydrogen economically competitive with grey hydrogen. L&T's focus on indigenous electrolyser development, aligned with India's Make in India initiative, mitigates import dependency and could lower production costs over time.

Financial Viability and Market Projections

L&T's green hydrogen ventures are not just strategic but financially robust. The company secured a landmark ₹22.39 billion incentive under the NGHM's second tender in 2025, with a 90,000-tonne-per-annum allocation. This revenue stream, coupled with its ₹397-per-kg bid for the Panipat refinery project (outbidding NTPC and Renew E Fuels), underscores its pricing discipline and operational efficiency.

The India Green Hydrogen Market is projected to grow at a CAGR of 20.76% from 2025 to 2030, driven by rising demand from sectors like steel, cement, and transportation. L&T's alignment with these growth vectors—particularly through green ammonia exports to the EU and Japan—positions it to capitalize on global decarbonization trends.

Investment Outlook: A Long-Term Play

For investors, L&T's green hydrogen strategy represents a long-term bet on India's energy transition. While the sector is nascent, the company's first-mover advantage, government support, and integrated approach reduce execution risks. L&T's carbon neutrality target by 2040 and water neutrality by 2035 further align with ESG trends, enhancing its appeal to institutional investors.

However, patience is key. Green hydrogen projects require 3–5 years to reach commercial viability, and returns will materialize gradually. Investors should monitor L&T's project milestones, such as the Kandla plant's commissioning and electrolyser manufacturing capacity. Additionally, tracking India's policy developments—such as adjustments to the SIGHT program or global carbon pricing mechanisms—will provide insights into the sector's trajectory.

Conclusion

L&T's strategic expansion into green hydrogen is more than a corporate initiative; it is a cornerstone of India's clean energy transition. By combining technical expertise, policy agility, and financial discipline, the company is poised to lead the green hydrogen revolution. For investors seeking exposure to the decarbonization megatrend, L&T offers a compelling case—though one that demands a long-term horizon and a tolerance for sector-specific risks. As the world pivots toward hydrogen-based economies, L&T's integrated ecosystem may well define the future of sustainable energy in India.