Larsen & Toubro has deferred its plans to expand electrolyser manufacturing capacity to 1 GW, choosing to maintain its current 400 MW facility in Gujarat instead. The company has invested ₹293 crore of its planned ₹450-550 crore outlay so far. This decision reflects a cautious approach to capital spending while waiting for the green hydrogen project pipeline to gain momentum.
Larsen & Toubro (L&T) has decided to pause its plans to scale up its electrolyser manufacturing capacity to 1 GW. This move highlights the company's cautious strategy as it manages its capital in an environment where demand for green hydrogen projects has been slower than initially expected.
Current Capacity and Investment Status
The company currently operates a 400 MW production facility in Hazira, Gujarat, which uses pressurized alkaline technology. L&T had originally planned to reach a 1 GW capacity by March 2027, with a total budgeted investment of ₹450 crore to ₹550 crore. According to the company's progress reports, it has already invested approximately ₹293 crore into the project. By halting further expansion at this stage, L&T is avoiding the risk of building excess capacity that could remain underutilized until market demand catches up.
Market Reality and Strategic Flexibility
The decision is not an exit from the sector but rather a strategic pause. Management noted that the current facility is sufficient to meet existing domestic needs. Green hydrogen projects in India often face long lead times and challenges in achieving cost parity with traditional energy sources. This makes the immediate, large-scale deployment of electrolysers difficult for many potential customers.
L&T leadership has clarified that they retain the technical capability to scale production to the 1 GW target within 12 to 18 months if market conditions improve. This flexibility allows the company to restart expansion quickly should large-scale green hydrogen, ammonia, or methanol projects reach the final investment decision stage.
What Investors Should Monitor
The most important monitorable for investors is the pace of new project announcements in the green hydrogen space. Because these projects often take three to four years to move from concept to operation, L&T’s decision to wait for concrete demand is a way to protect its profit margins and cash flow. Shareholders may look for updates on firm off-take agreements from industrial clients, which would serve as a key signal for when the company might resume its capital spending on this expansion.