What sustainable industrialisation means for India

Centre for Science and Environment

What sustainable industrialisation means for India

Centre for Science and EnvironmentNew Delhi

Monali Zeya Hazra, Coordinator


The Indian industry

• Indian industry is large: both in numbers and output

• More than 3 million establishments in formal sector - poorly documented informal sector

• Constitutes about 35% of the GDP

• Highly fragmented: large-scale in thousands and SMEs in millions


The Indian industry

• SMEs are important part of Indian economy:

– 40% of total manufacturing outputs

– 57% of the total exports of the country

– Bulk of employment in the industrial sector

– Contributes significantly to total industrial pollution (40-50%)

• Largely outside the mainstream environment governance – big problem

• Very different characteristics than the western industrial model


Indian industry - characteristics

• Indian industry is small in size but large in number – predominantly SMEs (95%)

Data for extraction and manufacturing sector

Unit India

2005-06

Establishments Number 140160

Net income Rs million 27.31

Specific income Rs 194.9



• Highly labour intensive

Unit Norway

2001

India2005-06

Establishment Number 11,161 140,160

Persons engaged

Number 276,489 9,111,680

Persons per establishment

Number 24.8 65.1



• Cheap labour

Unit Norway

2001

India

2001

Compensation of employees

USD 17,700 148016

Compensation per employees

USD per employee

64,017 0.16

Employee cost as percent of turnover

Percent 19.5 5.3



• Wide variations in technology between companies within a sector - some state-of-the-art but others with old technology

• Government and domestic sources still the major source of funds for industrialisation – One of the highest saving rates in the world – 25% of GDP – FDI accounts for less than 5% of capital investment


Indian industry – Energy

• Consumes about 50% of the total commercial energy

• Industry relatively independent of the grid, produces its power through direct fuel inputs or cogeneration

• Industry mostly dependent on coal . Some sectors such as pulp and paper, sugar big consumer of renewables (biomass).

• Very limited usage of solar, some have started using wind energy



• Increasing consumption + inefficient consumption

• Overall Indian economy – highly energy inefficient

• For every USD 1,000 in national income, India consumed 1.04 TOE of energy (only commercial)

• It is 0.09 TOE/USD 1,000 in Switzerland, 0.16 TOE/USD 1,000 in the UK and 0.23 TOE/USD 1,000 in the US

• Indian industry contributes one-fourth to the GDP but consumes half the energy – doubly inefficient



• Most major industrial sectors consume 25-100% more energy than the global best practices

• Iron & Steel

– Largest consumer of energy in Indian industry

– Consumes 10% of power and 27% coal

– Energy accounts for 35% total cost

– Indian mills: 30-40 GJ/tonne

– Global best practice: 14-20 GJ/ tonne



• Aluminium

– Very energy intensive

– Indian mills: 90 GJ/tonne


• Integrated pulp and paper

– Indian mills: 35-50 GJ/tonne


• Cement

– Energy accounts for 40% of the cost

– Indian cement mills consumes 4.2GJ/tonne

– Comparable to best in the world


Indian industry – Water

In developed countries, industry account for as much as 59 per cent of freshwater consumption

Industrial use10%

Domestic use8%

Agricultural use82%

Agricultural use30%

Domestic use11%

Industrial use59%

Low and middle income countries

High income countries



HOWEVER, water consumption by industries is increasing. It

is likely to go up by 1.5 times from 752 km3 in 1995 to 1170

km3 by 2025.

Most of the increase is likely to happen in developing

countries like India

Indian industry usage of freshwater to go up by 6 times from

current 40 billion m3 to 264 billion m3 by 2050

MoWR pegs the industrial water usage at 6 per cent while

according to the CPCB, it is 8 per cent and as per World

Bank, it is 13 per cent.

ALL agree that industrial water use is growing at fastest rate



Water usage in industry is double edged sword. Major consumers are thermal power plants, pulp

and paper, sugar, steel, etcSteel1.3%

Sugar0.5%Textiles

2.1% Others1.0%

Thermal power plants87.9%

Pulp and paper2.3%

Engineering5.1%



• Highly water inefficient

• For every 1 m3 of water consumed, the industrial value addition is just USD 7.5

• It is US$ 96 in S.Korea, USD 443.7 in the UK, USD 92 in Sweden, USD 49 in Thailand

• Poor water price (no systematic effort towards proper water pricing – groundwater not priced)



Poor pricing

• Industries pays for water through – Water cess, Cost of buying water from water suppliers and water self sourced if municipality insists on

• Water cess is peanuts inspite of revisions of rates in 2003

• Process water is priced at 0.20-0.30 paise per kl while for industrial cooling water is only 0.10 paise per kl.

• At this price:• Cooling water cess will constitute 0.2 per cent of turnover for TPP

• Process water cess will constitute 0.1-0.2 per cent of turnover for pulp and paper

• Process water cess will constitute 0.02-0.05 per cent of turnover for steel



• Water priced much higher in other countries

• United Kingdom – Rs 90/kl

• Canada – Rs 76/kl

• The Netherlands – Rs 51/kl

• France – Rs 42.50/kl

• United States – Rs 21/kl



Sector Average water

consumption by Indian industry

Thermal power plants 80 m3/Mwh

New closed loop plants – 10-15 m3/Mwh

Textiles 200-250 m3/tonne cotton

Cloth

Integrated iron and

steel

10-80 m3/tonne

Distilleries 75-200 m3/tonne alcohol


Water usage - Pulp and paper sector

Indian paper mills consume 130 m3 to produce one tonne. Between 1995-2002, Indian mills reduced water use by 40%

•230 •215 •200•178 •161 •144 •135 •130

•0

•50

•100

•150

•200

•250

•1995-1996 •1996-1997 •1997-1998 •1998-1999 •1999-2000 •2000-2001 •2001-2002 •2002-2003

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•0

•50

•100

•150

•200

•250

•Harihar Polyfibres •The Andhra Pradesh•Paper Mills

•BILT Shreegopal unit •The West Coast Paper•Mills

Water usage - Pulp and paper sector

• But it is still very high considering the global trends

•Water consumption in Indian mills: 130

•Water consumption in Canadian mills: 70

•Water consumption in European mills: 47

• Sp

ecif

ic w

ater

co

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Water usage - mining

Mining consumes large quantity of water For example, Lanjigarh mines of Vedanta

proposes to consume around 33,000 tonnes of water per year

Taking average per capita consumption of 55 lts/day, this much water can meet requirement of 6 lakh people.

During entire life of the mine (of 25 years), the mine will consume water which could have met the requirement of 15 million people



Limestone mines consume around 20-30 ltrs to extract one tonne of limestone. Annually, total water used to extract stands at 4.25 MT.

The issue of concern is that most limestone mines located in water scarce area

Iron ore mines consume anywhere between 500-800 ltrs of water per tonne of ore. In 2005 alone, iron ore mines consumed 77 MT of water.



Mining and its associated activities also affects the hydrological regime

The major impact of a large and deep opencast mine is on the ground water regime.

They breach groundwater and affect the availability of water to the local community



40 per cent of large-scale cement plants have breached the groundwater table.

In Goa, most iron ore mines work below the groundwater regime. For every tonne of iron ore extracted, 10 tonnes of water has to be pumped out.

Neyveli lignite mines in Tamil Nadu pumps out an estimated 40 million litre water every year



Can destroy the water basin of a river by changing course of river or destroying streamsRani Jharna and Khadi Jharna completely dried up

due to bauxite mining by BALCO in Gandhamardham hills

Course of few hilly rivers including Phaskhowa changed due to dolomite quarrying in Jalpaiguri

The Pipawar coal mining project has cut 3 major and 25 minor streams feeding river Damodar

Vedanta’s proposed mining in Niyamgiri hills will affect 36 streams flowing out of the range


Polluting also….

• Indian industry not only resource intensive but also polluting

• Since most consume large quantity of water, wastewater discharge also very high

• Pollution load very high

• Climate change key concern for many sectors

• Generating billions of tonnes of solid waste and hazardous waste with no proper management system


Pollution is rampant because…

• Regulatory bodies do not have enough teeth to monitor the pollution

• Institutional capacity is lacking

• Corruption is rampant


Regulatory failure

• SPCBs do not have capacity to regulate industry – most resources spent on consent management – little on monitoring and compliance management

• Deterrence for non-compliance – legal action - is not working

• SPCBs across the country have stopped filing cases – takes too much time – large proportion of cases dismissed

• Lack of credible deterrence


The facts are:

• In most cases: • Forest clearance granted;• Environmental clearances given;• Where public hearing goes against project,

project is cleared;• Renewals and expansion are a mere formality;


Environment Impact Assessment

• Huge conflict of interest involved

• Public hearing considered inconvenient (under the new notification dispensed with ‘outsider’ and even scope for not conducting PH, if ‘disturbed area’)

• EMP monitoring and compliance very poor. No punishment for non-compliance.

• No cumulative and regional EIA for projects


Pollution regulations in India…

……..are very poor

• They measure the concentration of the pollutant.

• Do not measure the total load

• They are not based on the best available technology

• They do not take into account the state of the receiving media – the river or the air


Why inefficient?

• No concrete government policy on industrial water use.

• No law determining exact amount of water or energy consumption by various sectors.

• CPCB has prescribed standards but they are not enforceable.

• No incentives for water or energy conservation or for adopting best technology

• No POLLUTER’s PAY principle adopted


Industry and Development

• Industry taking resources, polluting environment but is it contributing enough?

• Lets take example of mining sector…..


Mining and poverty

• Mining areas are also the poorest areas

• Three states with substantial dependence on minerals (between 8-10% of GDP/about 6-13% of the total revenue receipt) – Jharkhand, Orissa and Chhattisgarh

• Characterised by low per capita income, lower growth rates and higher levels of poverty and food insecurity.

• Maximum number of backward districts in the country: Jharkhand (19/22), Orissa (27/30), Chhattisgarh (15/16)


Mining and poverty:

• Major mining districts of the country are also the poorest and most underdeveloped districts.

• Iron ore districts• Keonjhar: Produces 21% of India’s iron ore;

60% BPL; ranked 24th out of the 30 districts of Orissa in HDI

• Bellary: 19% of iron ore production (most exported); largest number of private aircrafts; ranked third from the bottom in HDI in Karnataka; 50% literacy level


Resource curse?

•Of the 50 top mineral producing districts, 70% fall under the 150 most backwards districts.


Sustainable industrialisation

• India industry – small, old technology, labour-intensive, inefficient and polluting,

• Not contributing to development as it is taking

• Should we follow the western model – large, modern, automated, efficient and less polluting ???

• NO. Western model would not work for us

• Large automated plants provide little job for the amount of wealth they generate


Sustainable industrialisation

• With the amount of population India has – industrialisation without jobs - poor income distribution – not sustainable

• We need efficient and clean industry – but the one that provides jobs too – challenge of sustainable industrialisation in India

• Promote SMEs – they provide jobs – but develop and introduce clean technology – invest in R&D – provide cheaper capital – promote cleaner production - invest in governance

Date post:	15-Jan-2016
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What sustainable industrialisation means for India

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