Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

India Environmental Export Market Plan

Chapter 8 - Environmental Consulting Services

Environmental consulting services form a part of integrated engineering consulting services for the majority of consulting firms in India. The Environment Protection Act, 1986, and the introduction of economic reform policies in the early 1990s have accelerated environmental consulting services into a rapidly growing business. Increased environmental awareness, demand for environmental infrastructure, and a growing number of regulations and their pace of enforcement have produced a significant increase in the market potential and revenues of environmental firms. The growth in the number of environmental consulting firms (from a mere 50 in 1995 to about 150 in 1998) and an increased rate of diversification of existing firms into the environmental consulting sector are indicative of growth in this sector. The steady growth of this sector has also been supported by government and external donor agencies that support environmental programs. Environmental consulting clients include the Indian government, state governments, public sector organizations, external donor agencies, and private sector industries.

The growing number of environmental regulations and the increased pace of their enforcement are key driving forces for expansion of this market. Table 8.1 shows current and pending environmental legislation and related business opportunities.

Estimated Market Size and Growth Prospects

It is estimated that the environmental consulting market in 1997-1998 was approximately $90 million. It was the fastest growing sector in that year at 27.5 percent. Favorable market drivers indicate that the market will continue to grow at this rate over the next three to four years. The following paragraphs describe trends and business opportunities with high growth potential that are relevant to U.S. environmental consulting firms.

Project Management Studies

Growing demand for urban environmental infrastructure has produced a rising demand for project management studies in water supply and sewage treatment, solid waste management, and hazardous waste management. Many international funding programs (for example, the World Bank, Asian Development Bank, Overseas Economic Cooperation Fund) are normally preceded by technical assistance and feasibility studies. Given India’s recent economic expansion, improved foreign direct investment, and foreign institutional funding, the demand for project management studies is expected to remain high in the coming decade.

Environmental Impact Assessment

In January 1994, the Indian government made environmental clearance prior to establishment of industries necessary for a number of sectors. This landmark legislation was designed to integrate environmental concerns at the planning stage. It applies to new and expansion projects that fall in the covered sectors. As a result of this regulation, a detailed environmental impact assessment study of the proposed new expansion projects must be performed; it is evaluated subsequently by a Ministry of Environment and Forests (MOEF) expert committee for approval or rejection. Initially, a rapid environmental impact assessment report based on one season of environmental monitoring must be submitted to the expert committee. The recommendations of this committee will determine whether a comprehensive environmental impact assessment report based on three seasons of environmental monitoring is needed.

Given the expected continual expansion of India’s economy, the demand for environmental impact assessments should continue to grow. The environmental impact assessment market is becoming highly specialized, and the level of expert scrutiny at the central government level has become more comprehensive and rigorous. This is a good indicator for U.S. firms that have expertise and have established a reputation in this area. Indian financial institutions have also started considering environmental risk factors when evaluating corporate lending risks for any new projects. This trend promises to increase and will also increase the demand for environmental impact assessment studies.

Table 8.1 - Environmental Legislation and Corresponding Business Opportunities in Consulting Services

*Environmental Legislation*	*Business Opportunity*¹	*Growth Prospects² (Next Three-Four Years)*
The Water Prevention and Control of Pollution Act, 1974 and Rules, 1973	Project management (especially for common effluent and municipal sewerage treatment plants) Treatability studies Compliance audits Operation and maintenance of effluent treatment plants Water quality, monitoring, and modeling studies	High
The Air Prevention and Control of Pollution Act, 1981, and Rules, 1982	Urban air quality management and modeling studies Techno-economic feasibility studies for air pollution control systems Compliance audits	High
The Environment Protection Act, 1986, and Rules, 1987, 1992 (Environmental Statement), 1994 (Environmental Clearance)	Compliance audits Environmental audits Environmental impact assessment studies for industrial, infrastructure, mining, and thermal power projects	High
The Water Prevention and Control of Pollution Cess Act, 1997 and Rules, 1978	Water conservation audits	Medium
The Hazardous Wastes Management and Handling Rules, 1989, Amendment Rules, January 2000	Project management, especially for common waste treatment and disposal sites Compliance audits Investigation/assessment studies Environmental impact assessments for common waste treatment, storage, and disposal facilities	Medium
Manufacture, storage, and import of Hazardous Chemical Rules, 1989, Amendment Rules, 1994	Safety audits On site/off site emergency plans Compliance audits	Medium
The Bio-Medical Waste Management and Handling Rules, 1998	Project management Techno-economic feasibility studies for waste treatment and disposal systems	Medium
Draft Municipal Solid Wastes Management and Handling Rules, 1999	Project management EIA studies for identification of waste disposal sites	Low

Note: Environmental monitoring and testing has been specifically covered in Chapter 5 and is, therefore, not
covered here.
1. The design of pollution control systems/equipment has not been included as a business opportunity. It is considered a part of
the turnkey services provided by equipment suppliers (for example, the design of effluent treatment plants is a part of the
turnkey package for the supply of environmental treatment plants). Such design services are included in the respective
environmental market sector chapters.
2. “Low” prospects are defined here as those in which expected growth rates over the next three to four years will be less than
10 percent. “Medium” includes those with expected growth rates of 10 to 20 percent. “High” growth prospects are those
expected to exceed 20 percent.
Source: EQMS India Pvt., Ltd.

Environmental Policy and Regulatory Analysis

Gaining insight into environmental problems and designing regulatory and funding institutions often requires research and applied studies. The MOEF is currently preparing a comprehensive national policy on the environment. This initiative, and others like it, adds to the demand for environmental policy and regulatory studies.

Finally, the gradual shift of large and medium-sized firms toward pollution prevention and adoption of voluntary environmental management approaches has expanded the demand for strategic environmental management services.

Pollution Prevention and Waste Minimization Studies

The demand for environmental audit, pollution prevention, and waste minimization studies has grown since enforcement of the Environmental Protection Rules, 1992–1993 began. These rules made mandatory the submission of environmental statements from firms that generate domestic effluent, are the source of air pollution, or generate hazardous waste. The MOEF plans to increase its thrust for environmental audits in polluting sectors. The potential for pollution prevention and waste minimization is significant, even in large and medium sectors, given the high level of resource use.

Environmental Management Systems

The appreciable increase in environmental awareness and growing international influence have forced industry to realize that it is imperative to manufacture products, source raw material, and sell finished goods in a manner that is environmentally acceptable. Indian industry has shown a positive response to environmental management systems since 1996. About 175 public and private firms from diverse sectors have obtained ISO (International Standards Organization) 14001 certification. Market trends indicate that more firms will be joining the trend to demonstrate sound environmental performance in planning and operational activities. In other words, “greening the supply chain” is likely to accelerate the adoption of ISO 14001 standards throughout Indian industry. Accordingly, there is a tremendous scope for consulting and ISO 14001 certification services.

Environmental Training

Growing environmental awareness and obligations have also produced an increased appreciation of the need to build in-house capabilities. For example, there is greater emphasis on adding training components to projects and programs being funded by international donor agencies. A promising potential and demand exist for environmental training programs. The range of opportunities in environmental training includes the following:

Environmental regulations
Environmental audit/pollution prevention/waste minimization
Environmental management systems
Occupational health and safety management systems

Currently, only a few Indian organizations have professional capabilities in the design and delivery of training programs of acceptable quality in these areas.

Competitive Analysis

As previously mentioned, most Indian environmental consulting firms may be grouped into one of two categories:

1. Engineering consulting services for specification, design, installation, or commissioning of treatment systems
2. Specialized, niche-based consulting firms providing services to government, industry, and institutions

Projects covered in the first category are included in the equipment market. Such projects are usually offered as part of a comprehensive turnkey package. Only a limited number of Indian firms in this category provide services such as environmental impact assessments, audit reports, or environmental policy studies. Many of them have already established long-term strategic partnerships with foreign firms, including those of the United States, for enhancing their capabilities.

Increasing environmental regulation, greater enforcement, and a clear shift toward the adoption of proactive environmental management in the second half of the 1990s gave a significant push to the demand for environmental consulting services in India. Most analysts agree that the environmental consulting market has grown faster than the corresponding environmental equipment market.

Consequently, there is a noticeable increase in the number of firms that provide “pure” environmental consulting services. Although the Indian market is very price sensitive, clients are willing to pay a premium for the quality and suitability of the services offered. Small firms (typically with one to five employees) dominate the sector. These firms usually specialize in a narrow sub-category such as environmental impact assessments, environmental policy studies, or ISO 14001 consulting services.

The quality of services provided by these firms varies widely. The Indian government has no registration requirements for conducting environmental impact assessments or other types of environmental studies. At the state level, however, various State Pollution Control Boards (SPCBs) require registration of environmental consulting firms for conducting different assignments including those in the private sectors. Currently, only 10 to 15 large and medium firms are active in the environmental consulting sector. Given the growth of such services and the interest of foreign firms, however, the number of large and medium-sized firms is likely to grow faster in the next few years. The number of collaborations in this sector is less than in consulting associated with environmental goods and equipment purchases.

International Competition

Other countries that appear to be targeting the environmental consulting sector in India are Australia, Denmark, Canada, the United Kingdom, France, and Japan. Many of their firms are already engaged in performing environmental impact assessments or pollution prevention studies sponsored by the donor agencies of their respective countries. Foreign firms enter India through donor projects to establish their market presence and gain experience. Thereafter, they enter into strategic alliances with local partners for domestic projects with reduced cash-flow risk. Experience indicates that these global players can become very cost-effective when seeking additional projects.

U.S. Position in the Market

Several U.S. firms (such as Tetra Tech EM Inc., Acres International, and Montgomery Watson, Inc.) have already entered the Indian environmental consulting services market and are doing good business. Increasingly stringent environmental regulations and rising environmental awareness are leading more Indian firms to seek strategic partnerships with foreign firms. The U.S. environmental industry can leverage its already strong presence along with its superiority in the hazardous waste and biomedical waste sectors to further its presence in India.

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