Physical storage means compressing the gas — option 3.

The distinction the question turns on. Hydrogen can be stored in two fundamentally different ways :

Option 1 describes the chemical route and is therefore the intended contrast; option 2 is not storage at all, since getting hydrogen back out of water requires electrolysis, which consumes more energy than the hydrogen will yield.

Why hydrogen is so awkward to store. It has the highest energy per kilogram of any fuel — about 120 megajoules, roughly three times petrol — but it is the lightest of all gases, so its energy per litre at ordinary pressure is tiny. A useful quantity therefore has to be squeezed into a small volume, and even at 700 bar a hydrogen tank holds far less energy per litre than a petrol tank. Liquefaction packs it more densely but costs about a third of the fuel’s own energy to achieve and suffers continuous boil-off.

Where each is used. Compressed gas at 700 bar in carbon-fibre tanks is the standard for fuel-cell vehicles; liquid hydrogen is used where volume matters most, notably as rocket propellant; metal hydrides are heavy but safe and are used where weight is not critical.

The Indian context : the National Green Hydrogen Mission of 2023 targets five million tonnes of green hydrogen a year by 2030, and storage and transport are among the problems it must solve.

Hence, the answer is by compressing hydrogen gas.