Almost 63 per cent of municipal wastewater and 40 per cent of industrial wastewater is left untreated and discharged.  India is also one of the largest and fastest growing greenhouse gas emitters.  With these warning concerns, Arup Mitra, in this article discusses opportunities in the pollution control equipment (PCE) industry and speculates sub-sectors future.

 

Half of world’s 20 most polluted cities are in India, according to World Health Organization’s Global Urban Ambient Air Pollution 2016 database. India is grappling with significant challenges in air, water and waste management. The legislative framework is strong, but enforcement is relatively weak.

 

About 30-40 per cent of India’s industrial units produce sizeable quantities of pollutants.  There are about three million small scale enterprises in the country and most of these are using minimal or no pollution control equipment.  The Government of India has classified 60 industry categories as highly polluting; these sectors are subject to stringent standards.  The Indian Parliament passed the National Green Tribunal Act in 2010, which led to the creation of the National Green Tribunal.  Its purpose is the effective and expeditious disposal of cases relating to environmental protection. Orders of the Green Tribunal are driving many recent environment management initiatives.

 

The Indian pollution control industry consists of a large number of specialised equipment suppliers, chemical suppliers, engineering-procurement-construction (EPC) contractors, consultants, build-own-operate and transfer (BOOT)/build-own-operate (BOO) operators, analytical equipment and services companies.  The equipment market is dominated by small and medium-sized units, manufacturing end-of-pipe treatment solutions.  Major suppliers of high-end pollution abatement technology are from the United States, Germany, China, South Korea, and Japan.  Most of the leading international original equipment manufacturing companies operate in India.  

 

India’s environmental technologies market is valued at $23.22 billion, including goods and services.  Increasingly, service exports are overtaking manufactured goods due to technology licensing, engineering contracts, consultancy work, etc.  As the technologies themselves become more complex, it is difficult to track exact figures, but growth trends can be noted by a proxy of key goods in the air, water, and waste management sub-sectors being imported by India to meet sharply increasing demand, though it is noteworthy that the market is split between the municipal government buyers who provide community environmental services, and private sector trade.

 

Leading sub-sectors

Water and wastewater are the most promising sub-sector in India’s environmental segment.  This accounts for 26 per cent of India’s PCE technologies and is expected to grow at 15-20 percent every year, over the next five years.  The government, mostly local government with construction funding from state and central government agencies, is primarily involved in the treatment of raw water, water transmission and distribution, wastewater collection and sewage treatment and disposal operations.  The private sector industries in power, food and beverage, chemicals, pharmaceuticals, refineries and textiles sectors are generating immense opportunities for water and wastewater treatment equipment.  These industries prefer advanced treatment technological systems such as reverse osmosis membranes for treating their wastewater. 

 

The water treatment market is gradually shifting from chemical treatment and demineralisation plants to membrane technology.  The concept of wastewater recycling and zero discharge systems are becoming more widely accepted as new technologies such as sequencing batch reactor (SBR) and membrane bioreactor (MBR) based treatment gain in popularity.  Government of India has committed significant funds for upgrading the infrastructure of cities and towns, to include upgrading water supply and wastewater treatment systems.   However, government entities remain risk averse in exploring and adopting new environmental technologies.   

 

Coal-fired thermal power plants offer great opportunities for air pollution control equipment as 58 per cent of the installed power generation capacity is coal-fueled.India’s Ministry of Environment, Forests & Climate Change in December 2015 notified changes related & relevant to thermal power plants under the Environment (Protection) Amendment Rules, 2015, targeting significant reduction of particulate matter (PM), sulfur oxide (SOx), nitrogen oxides (NOx), mercury emission and freshwater withdrawal in the order of 60-80 per cent.  Based on this, Ministry of Power, in its action plan dated October 13, 2017, set the following roadmap for various pollutant categories in 650 power plants of India, comprising 196,667 mw of installed capacity:

 

India’s Central Pollution Control Board (CPCB) has issued directions on December 11, 2017 to thermal power plants to ensure compliance as per the revised plan, by 2022. Overall 160,000 mw of thermal power capacity is slated to be linked to FGD systems.  The mandated timeframe of four years appears unrealistic; a more realistic timeframe is seven years.  Indian utilities will spend $ 8.5 billion on installation of FGD systems over this seven-year timeframe.  About 55,000 mw capacity is owned by National Thermal Power Corporation (NTPC); and the organisation is on track by having floated FGD tenders for about 25,000 mw capacity already.  Another 80,000 mw capacity is owned by state electricity boards, which are financially weak and are unlikely to meet the stipulated timeframe.  The independent power producers own about 30,000 mw capacity and are capable of installing FGD systems but are moving slow as their financials are based on old tariff structures which do not factor capital required for pollution abatement stipulated recently. 

 

Municipal Solid Waste (Management & Handling) Rules, 2016 contains new standards for composition of compost, treatment of leachates, emissions from incineration, and criteria for waste treatment facilities and landfills.  Coupled with focus of the new regulation on waste to energy and funding available from Government of India for upgradation of cities.

 

New opportunities

On May 31, 2019, Prime Minister Narendra Modi's government launched a new ministry called it as the Jal Shakti, to bring all the water-related works under one ministry to provide safe drinking water to the people of India.  The new Jal Shakti Ministry has been created by reorganising and merging the earlier Ministry of Water Resources, River Development and Ganga Rejuvenation, and the Ministry of Drinking Water and Sanitation. The Jal Shakti Ministry will cover issues ranging from international and inter-states water disputes, to the Clean Ganga project - which is a flagship initiative to clean the river, its tributaries and sub-tributaries. 

 

The Government of India has allocated $250 million to National Mission for Clean Ganga (NMCG) since 2015, out of which $156 million was provided to state-level agencies and executing agencies for development of the Ganga River in 2017.  The NMCG funded projects will continue to be a major opportunity for municipal water projects.  So far, 267 projects have been funded, out of which, 82 projects have been completed.   

 

The Ministry of Water Resources, Government of India formulated a policy for public private partnership (PPP) projects in the municipal wastewater sector through an innovative hybrid annuity model under the Namami Gange (Clean Ganga) Program.  Two most successful categories of PPPs in India are the build, operate and transfer - end-user (in which the end user or consumer itself is the private operator, hence owns and takes responsibility for the project) and the design, build, operate model (DBO).  In the latter, the urban local body funds the capital costs for the project and uses the private sector to bring in technology and managerial skills to operate and maintain the assets for a period of 5 to 10 years. The construction, technology and operating risks are borne by the private sector operator while the financing risk is borne by the government counterpart.

 

Promising sub-sectors in PCE industry	Sub sector Projected growth rate
Water and wastewater management	15-20 per cent
Air pollution control	10-20 per cent
Municipal solid waste management	6-8 per cent

About the author:

Arup Mitra is professor of economics at the Institute of Economic Growth, Delhi. His area of research encompasses labour and welfare, urban development, industrial growth and productivity, infrastructure development, and gender studies.