What sustainable industrialisation means for India

1. Monali Zeya Hazra, Coordinator Centre for Science and Environment New Delhi 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

11. 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

12. 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

13. 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

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

15. 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)

16. 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

17. 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

19. 230 • 250 • 215 • 200 • 178 • 200 • 161 • 144 • 135 • 130 • Specific water consumption • (cubic metres/BDMT products) • 150 • 100 • 50 • 0 • 1995-1996 • 1996-1997 • 1997-1998 • 1998-1999 • 1999-2000 • 2000-2001 • 2001-2002 • 2002-2003 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%

20. 250 • 200 • 150 • 100 • 50 • 0 • Harihar Polyfibres • The Andhra Pradesh • BILT Shreegopal unit • The West Coast Paper • Paper Mills • Mills 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

21. 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

22. 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.

23. 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

24. 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

25. Water usage - mining • Can destroy the water basin of a river by changing course of river or destroying streams • RaniJharna and KhadiJharna 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

26. 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

27. Pollution is rampant because… • Regulatory bodies do not have enough teeth to monitor the pollution • Institutional capacity is lacking • Corruption is rampant

28. 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

29. 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;

30. 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

31. 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

32. 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

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

34. 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)

35. 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

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

37. 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

38. 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