What sustainable industrialisation means for India

1
What sustainable industrialisation means for India
2
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

3
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

4
Indian industry - characteristics

• Indian industry is small in size but large in
  number predominantly SMEs (95)
• Data for extraction and manufacturing sector

5
Indian industry - characteristics

• Highly labour intensive

6
Indian industry - characteristics

• Cheap labour

7
Indian industry - characteristics

• 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

8
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

9
Indian industry 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

10
Indian industry Energy

• 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

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Indian industry Energy

• Aluminium
• Very energy intensive
• Indian mills 90 GJ/tonne
• Global best practice 60-70 GJ/ tonne
• Integrated pulp and paper
• Indian mills 35-50 GJ/tonne
• Global best practice 20-25 GJ/ tonne
• Cement
• Energy accounts for 40 of the cost
• Indian cement mills consumes 4.2GJ/tonne
• Comparable to best in the world

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Indian industry Water

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

Low and middle income countries
High income countries
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Indian industry Water

• 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

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Indian industry Water

• Water usage in industry is double edged sword.
• Major consumers are thermal power plants, pulp
  and paper, sugar, steel, etc

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Indian industry Water

• 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)

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Indian industry Water

• 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

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Indian industry Water

• 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

18
Indian industry Water

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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

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Water usage - Pulp and paper sector

• But it is still very high considering the global
  trends

• Water consumption in Indian mills 130

• Specific water consumption (cubic metres/BDMT
  products)

• Water consumption in Canadian mills 70

• Water consumption in European mills 47

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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

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Water usage - mining

• 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.

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Water usage - mining

• 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

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Water usage - mining

• 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

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Water usage - mining

• Can destroy the water basin of a river by
  changing course of river or destroying streams
• Rani 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
• Vedantas proposed mining in Niyamgiri hills will
  affect 36 streams flowing out of the range

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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

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Pollution is rampant because

• Regulatory bodies do not have enough teeth to
  monitor the pollution
• Institutional capacity is lacking
• Corruption is rampant

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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

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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

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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

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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

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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 POLLUTERs PAY principle adopted

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Industry and Development

• Industry taking resources, polluting environment
  but is it contributing enough?
• Lets take example of mining sector..

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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)

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Mining and poverty

• Major mining districts of the country are also
  the poorest and most underdeveloped districts.
• Iron ore districts
• Keonjhar Produces 21 of Indias 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

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Resource curse?

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

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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

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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 RD
  provide cheaper capital promote cleaner
  production - invest in governance