Grey explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Hydrogen colour codes describe the production route and its carbon intensity, not the gas itself. Grey comes from natural gas with carbon released, brown or black from coal, blue adds carbon capture, green uses electrolysis with renewable electricity, and pink uses nuclear power.
Same Molecule, Different Carbon
Hydrogen is hydrogen. The colour vocabulary exists because how it is made determines the carbon dioxide released, and that is what regulation, buyers and carbon pricing actually care about.
| Colour | Production route | Carbon intensity |
|---|---|---|
| Grey | Steam methane reforming of natural gas; CO₂ vented | High |
| Brown / black | Gasification of lignite (brown) or coal (black); CO₂ vented | Highest |
| Blue | Grey or brown route with carbon capture and storage | Low to moderate, depending on capture rate |
| Green | Electrolysis of water using renewable electricity | Near zero |
| Pink / purple / red | Electrolysis using nuclear electricity | Near zero |
| Turquoise | Methane pyrolysis, producing solid carbon rather than CO₂ | Low, if the solid carbon is sequestered or used |
| Yellow | Electrolysis using solar, or in some usages grid electricity | Depends entirely on the grid mix |
| White | Naturally occurring geological hydrogen | Very low, but availability is uncertain |
Two cautions on the vocabulary. First, "blue" covers a wide range: a plant capturing 60% of its carbon dioxide and one capturing 95% are both called blue, and the difference is enormous. Second, "yellow" is used inconsistently — sometimes for solar electrolysis, sometimes for grid-powered electrolysis, which can be more carbon-intensive than grey. Ask for the measured carbon intensity, not the colour.
Why Hydrogen Matters Commercially
Hydrogen is already used at industrial scale — in refining, in ammonia for fertiliser, and in methanol production. Almost all of that is grey. Replacing it with low-carbon hydrogen decarbonises those existing uses without needing any new demand.
The expansion case rests on sectors that cannot easily be electrified: steel production using direct reduced iron, high-temperature industrial heat, long-distance shipping and aviation fuels, and long-duration energy storage.
India's Position
The National Green Hydrogen Mission, approved in 2023, aims to establish India as a hub for the production, use and export of green hydrogen and its derivatives, targeting around 5 million tonnes of annual production capacity by 2030 with substantial financial outlay. It supports both electrolyser manufacturing and hydrogen production through incentive programmes, alongside enabling measures such as open access for renewable power and waiver of transmission charges for qualifying projects.
India's structural advantages are real: among the world's lowest solar tariffs, large land availability for renewable capacity, an existing ammonia and fertiliser industry that consumes hydrogen today, established engineering capability, and port infrastructure on both coasts oriented towards European and East Asian markets.
The constraints are equally real: water availability in the arid regions with the best solar resource, electrolyser cost and the depth of the domestic manufacturing base, the intermittency of renewable supply against the high utilisation electrolysers need to be economic, and the cost of conversion and shipping.
The Shipping Problem
Hydrogen is extremely difficult to transport. It has very low volumetric energy density, liquefies only at cryogenic temperatures, and embrittles many metals. Long-distance trade therefore generally means converting it into a carrier:
| Carrier | Advantage | Disadvantage |
|---|---|---|
| Ammonia | Existing production, shipping and port infrastructure worldwide | Toxic; energy loss in conversion and cracking back to hydrogen |
| Liquid hydrogen | Pure hydrogen delivered | Cryogenic at very low temperature; high energy cost and boil-off |
| Methanol | Liquid at ambient conditions; easy to handle | Requires a carbon source |
| Liquid organic carriers | Ambient handling | Carrier must be shipped back; energy penalty on release |
For most export scenarios, green ammonia is the practical route — which is why Indian project announcements are predominantly ammonia projects, and why the natural first customers are fertiliser and shipping fuel buyers rather than hydrogen users as such.
What Determines Export Competitiveness
- Delivered renewable electricity cost. The single largest component of green hydrogen cost.
- Electrolyser capital cost and utilisation. High capital cost must be spread over high running hours, which conflicts with intermittent renewables unless firmed.
- Water. Electrolysis needs demineralised water; in coastal arid regions that means desalination, with its own cost and energy penalty.
- Conversion cost to ammonia or another carrier, and the energy lost in the process.
- Shipping distance to the buyer.
- Certification. Buyers in regulated markets need certified carbon intensity, not a colour label. Certification schemes and their acceptance in the destination market matter as much as the physical cost.
What an Exporter or Adviser Should Watch
- Certification standards. Which scheme the destination market recognises determines whether your product qualifies at all.
- Offtake contracts. Long-term offtake is what makes projects financeable; announced capacity without offtake is not a market.
- Destination policy. Buyer-side subsidies and mandates in Europe, Japan and Korea shape where the demand actually appears.
- Carbon border pricing. Hydrogen is within CBAM scope, so carbon intensity directly affects landed cost in the EU.
- Port and storage infrastructure for ammonia at both ends.
Practical Tips
- Never accept a colour as a specification. Contract on measured carbon intensity per kilogram, with a stated methodology and verification.
- Check which certification scheme your target buyer's regulator accepts before choosing one.
- Model water cost explicitly in arid-region projects; it is routinely underestimated.
- For existing ammonia and fertiliser producers, decarbonising current hydrogen use is usually a better first project than a greenfield export scheme.
- Follow the destination market's subsidy and mandate design; it determines the price a buyer can actually pay.
Related Services & Guides
- CBAM for Indian Exporters
- Sustainable and Green Exports
- India's GHG and Energy Policy Context
- More Guides
Key Facts About Grey
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What do the hydrogen colours mean?
They describe the production route and its carbon intensity, not the gas. Hydrogen is the same molecule in every case; the colour tells you how it was made and therefore how much carbon dioxide was released doing so.
What is grey hydrogen?
Hydrogen produced from natural gas by steam methane reforming, with the carbon dioxide released to the atmosphere. It is the dominant production route worldwide today and the cheapest, which is precisely the problem.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Grey: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.