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What sustainable industrialisation means for India

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Title: 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

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
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
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
  • 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

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 POLLUTERs 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 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

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 RD
    provide cheaper capital promote cleaner
    production - invest in governance
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