Cheap Ammonia, Hard Delivery?

Good Morning. India’s lofty ambitions to produce green ammonia are taking shape, with Indian companies quoting record-low bids at a recent auction. The litmus test, however, lies in the delivery at the said price, while managing green definitions, subsidies and technology.  

In other news, Prime Minister Narendra Modi and Chinese President Xi Jinping created history by discussing many sensitive issues, including border management as well as trade. Meanwhile, weather predictions bring no cheer as it’s expected to remain wet even in September. 

DECODE THE NEWS

India Sets Global Low For Green Ammonia, But Delivery Will Be The Real Test

What? 

The promotion of Green Ammonia started with the Green Hydrogen Mission launched in 2021. The sector has now taken off with Solar Energy Corporation of India (SECI)’s auctions which yielded headline grabbing bids. 

The lowest ever bid seen to supply green ammonia – has come from India – at $571 per tonne in the recent auctions. Global prices hover around $700-800 per tonne. It could establish India has a low-cost supplier – providing it with a unique advantage, amidst the ongoing trade war. 

What?

Green Ammonia is important for India too. It’s a key cog in our ambitions to hit net zero emissions. Instead of usual fossil sources like imported natural gas, green ammonia is made by splitting water using renewable sources of electricity, in a process called electrolysis. 

It’s utilities are multifold as it can be used as a low-carbon fertiliser, hydrogen carrier, energy storage medium and much more. 

Why?

India’s growing green sources of power generation can make it possible to produce green ammonia. But the low-cost bids are underpinned by subsidies. Under the Production Linked Incentives (PLI) scheme, producers will get subsidies for the first three years. 

That’s not all, the definition of ‘green’ in India is different than its European counterparts, amongst others. The country which is already facing Europe’s carbon tariff holds a few uncertainities in the future. 

In the past, many infrastructure projects which saw record low bids faced execution hurdles. The real test in the success of these projects lies in the delivery of green ammonia at the said price. Moreso because the bidders will have to deliver green ammonia price for a period for ten years. 

The costs, in spite of subsidies, make it challenging. The price of electrolysers are high, and the mandate to source only green energy can face transmission challenges. But, they have three years to figure it out as that’s when they’re expected to start the supply. 

Read on to know the intricacies of this fuel and the future it holds. 

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CORE NUMBER

Rs 2.24 lakh crore

This is how much combined marketcap India’s 10 largest listed companies lost in the markets in the last week of August. Eight of the top 10 companies ended in the red as the benchmark index Sensex shed 1.8% of its value. The much-feared US’ 50% retaliatory tariffs on India came into effect during the week, dashing hopes of a last-minute reprieve. 

This is how much value companies shed last week:

The outliers are TCS whose value jumped Rs 11,125 crore and that of FMCG major Hindustan Unilever climbed Rs 7,318 crore.

FROM THE PERIPHERY

‘Dragon & Elephant Must Come Together’

Prime Minister Modi and Chinese president Xi Jinping met on August 31 at Tianjin. They discussed border management, trade as well as civilisational co-operation, on the sidelines of Shanghai Cooperation Organisation (SCO). The meeting lasted 20 minutes longer than scheduled. The talks are crucial in the backdrop of the ongoing trade war that both nations face with the US, as well as Beijing’s leadership of SCO. 

Critical Moment: The two Asian leaders pledged to uphold multilateralism, multipolarity, and committed to a world less dependent on Western dominance. President Xi said that India and China, ‘dragon and the elephant’, must come together to promote peace and prosperity. He added that they should be friends, good neighbours, and work together.

Implications: Both the leaders confirmed that their special representatives had reached a border management agreement, for peace along contested frontiers. The Kailash Mansarovar Yatra pilgrimage will resume, and direct flights between the two countries have been restored. Modi invited Jinping to Brazil, Russia, India, China, and South Africa (BRICS) Summit in 2026, which will be hosted by India.

Luxury Carmakers Await GST Clarity

As the government prepares for a goods and services tax (GST) reform, it could land a sin goods tax of 40% on luxury cars. This speculation has left luxury carmakers in a fix, ahead of the busy festival season. Without clarity, a lot of customers are in a wait-and-watch mode, delaying purchases. More details could emerge as a high-powered GST council chaired by Finance Minister Nirmala Sitharaman is expected to meet between September 3-4. 

Why It Matters: While electric cars attract 5% GST as per current rules, haze remains on electric luxury cars, and what their tax component would be. Most carmakers hope that e-vehicles continue to remain in the lower slab, irrespective of the price points. 

What This Means Going Forward: Premium cars as well as sports utility vehicles (SUVs) have been contributing to a large share of car sales in the last few years. Higher tax on these cars could push the market towards mass market passenger vehicles or hatchbacks.

Indian Rice For Fillipinos

Amidst the ongoing export crunch, India is looking for new markets. One of them is the Phillipines, which is one of the world's largest importers of rice. A delegation of leading exporters from India are to visit the country next month, says a report by PTI. 

Fast Facts: The Phillipines’ agricultural imports account to $20 billion including rice, wheat, oil cake palm oil and more. Currently Indian trade with the country stands at $413 million. That’s only 2% of the total trade of the country, even as it sells a variety of products like bovine meat, groundnut, and tobacco in addition to rice.

What’s Next? Philippines food importers delegation is to participate in World Food India fair from September 25-28, and International Rice Conference on October 30-31, 2025. India’s exports to the Commonwealth of Independent States (CIS) have been increasing – from $480 million in 2023-24 to $628 million in 2024-25.  

PODCASTS

“Re-Globalisation Without America”: Dr Richard Baldwin

On Episode 665 of The Core Report, financial journalist Govindraj Ethiraj talks to Dr Richard Baldwin, Editor in Chief, VOXEU. 

• Why Trump’s Tariffs Are Unlike Anything Since World War II

• The Myth of Bringing Back Manufacturing Jobs

• Ripple Effects: Cascading Protectionism and Domino Liberalisation

• From Obama to Trump: How America Turned Against Globalisation

• Strategic Tariffs, Supply Chains, and the Weaponisation of Trade

• Why Businesses Must Build Resilience Beyond the U.S. Market

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