The market for environmental monitoring technologies in India was approximately $59 million in 1999.
As a result of India’s economic liberalization process, recent years have seen strong economic growth. Industrial growth and other techno-economic and social developments have produced increased demand for monitoring and measurement of environmental quality initiatives. There is a growing realization among regulators, industry, nongovernmental organizations (NGOs) and research institutions that environmental monitoring is a vital prerequisite for designing and ensuring effective environmental programs.
Regulatory compliance management programs historically drove the demand for environmental monitoring. Growing recognition and voluntary adoption of resource conservation and pollution prevention measures, however, are expanding the scope of this demand. The success of these concepts greatly depends upon timely, accurate, and reliable monitoring and measurement.
There are four key reasons for growth in the demand for environmental monitoring equipment and services:
Growing understanding of the value that can be recaptured through product or component recycling;
Greater enforcement of pollution control laws by the central and state agencies;
Government incentives such as reduced import duties and accelerated depreciation on equipment;
Greater awareness of technology options.
Market Segments
Historically, monitoring and testing equipment have been used largely by laboratories and research organizations, especially those responsible for testing to ensure compliance with environmental standards. There is, however, a growing number and variety of end users for environmental monitoring and testing equipment. The major users of monitoring and testing equipment can be categorized as follows:
Government Laboratories and Regulatory Agencies
Government-owned laboratories established as a part of the environmental regulatory regime account for a large portion of the total market. There are more than 100 recognized laboratories engaged in environmental monitoring, testing, and consulting, including laboratories of the Central Pollution Control Board (CPCB) and various State Pollution Control Boards (SPCBs). This category includes research laboratories supported by the Indian government, such as National Environmental Engineering Research Institute (NEERI), National Physical Laboratory (NPL), Indian Institutes of Technology (IITs), and universities. These organizations are also often supported through bilateral and multilateral funding agencies to upgrade their testing facilities. Because of the strengthening of environmental enforcement, the demand for monitoring and testing through government recognized laboratories is increasing at a rapid rate.
Private Laboratories and Research Organizations
Organizations supported and promoted by large corporations and foundations, as well as nongovernmental agencies, also use environmental monitoring and testing equipment. Some of the private organizations and laboratories have state-of-the-art monitoring facilities, however, the number of such organizations is small. This sector of end users is likely to grow at a rapid pace in years to come as privatization increases.
Industry
The current economic scenario and the globalization of business has forced Indian industry to think more competitively and proactively rather than reacting to environmental compliance requirements. The competitive drive has forced industries to become more accountable for their environmental performance, leading to more proactive and responsible corporate behavior. Large corporations have initiated processes to establish sophisticated monitoring and testing facilities closely integrated with production. This has allowed them to reduce waste generation, improve market image, improve relationships with regulators, and reduce liability risks.
Common Effluent Treatment Plants
The concept of common effluent treatment plants is gaining popularity among industrial clusters. Past fiscal incentives have led to several common effluent treatment plants commissioned in Vapi, Valsad, Mumbai, Thane-Belapur, Pali, and many other locations. These common effluent treatment plants have received criticism for their performance, however, largely because of poor monitoring quality and inaccurate measurement.
Nongovernmental Organizations and Institutions
The role of NGOs in the changing socio-environmental scenario is of crucial importance. The growing influence of public interest litigation is testimony to the fact that the level of awareness among NGOs and the populace is increasing rapidly. Many NGOs have well-equipped laboratories. Academic institutions have also been placing added emphasis on the understanding of environmental issues. Today, within NGOs and non-government institutions, there are many more professionally trained personnel capable of monitoring and measuring environmental quality. These institutions are important end users.
Estimated Market Size and Growth Prospects
The use of environmental monitoring and testing equipment occurs predominantly in government organizations. These organizations account for roughly 60 percent of the total use. The total market was estimated at $40 million in 1997-1998. Because of a recessionary trend in the growth of the water and waste treatment market during 1997-1998, the growth of the environmental monitoring market was also sluggish. The short-term annual projection suggests a growth in the range of 7 percent to 8 percent.
India’s government and various donor agencies have made significant investments in strengthening the existing infrastructure for improved monitoring and measurement of environmental quality. Various bilateral and multilateral donor agencies have instituted programs and projects with hopes of importing technical assistance, equipment, and technologies for environmental quality monitoring and testing. Some of the major investors in this area include the World Bank, Asian Development Bank, United States Agency for International Development, Danish Agency for International Development, Australian Agency for International Development, Norwegian Agency for Development, Department for International Development, the United Kingdom, Canadian Agency for International Development, and bilateral assistance programs of Germany, Sweden, and the Netherlands. Many such programs help to strengthen regulatory infrastructure and empower regulatory agencies.
Recently, the World Bank initiated a project for the development of capacity among agencies to assist them in pursuing a pollution prevention agenda. The objective of the program is to develop and diffuse pollution prevention techniques among industries. The funds available under this program are local and foreign. Approximately $25.5 million are available under these two categories, the foreign component accounting for approximately $16 million.
Market Opportunities
Some important areas where environmental monitoring technologies, equipment, and services are in demand are described below.
Air and Noise Quality Monitoring Equipment
This category includes ambient air and stack air quality monitoring equipment. There are several manufacturers of ambient air quality monitoring equipment in the country. However, there are not many manufacturers of continuous stack monitoring kits and equipment for monitoring and testing gaseous pollutants and toxic and hazardous fumes generated during industrial processes. Many industrial enterprises now realize that they can increase their productivity by minimizing the loss of valuable resources such as heat through the installation of continuous monitoring equipment. Major industrial sectors that can benefit from continuous monitoring of stack emissions include thermal power, cement, fertilizer, and refineries. Industrial and infrastructure development activities requiring stricter environmental, health, and safety compliance are also driving the market for noise monitoring equipment.
There is also a good market opportunity for equipment used to continuously collect, record, and analyze meteorological conditions and weather patterns. Major users of such equipment include the Indian government’s meteorological department and airports that monitor and record weather patterns.
Water Quality Monitoring Equipment
There is a huge demand for testing equipment such as ion analyzers, gas chromatographs, high-pressure liquid chromatographs, atomic absorption spectrophotometers, inductive coupled plasma, ultraviolet spectrometers, and thermo-hydrographs. There is an increasing demand for monitoring aids such as electronic flow-meters and recorders, current meters, soil and sediment samplers, samplers for benthic flora and fauna, deep water samplers, dissolved oxygen samplers, continuous pH monitors, and monitoring equipment for rivers, lakes, and marine water quality. Numerous Indian firms act as suppliers of foreign manufacturers for this equipment.
Industrial Hygiene and Safety Monitoring Equipment
A few examples of equipment in this category include restorable dust monitoring systems, personal samplers, hazardous gas detectors, and fire alarm systems. This subsection represents high potential for growth because of enhanced enforcement of regulatory requirements and growing pressure from internal stakeholders such as employees and customers to improve the workplace environment. Large corporations are becoming responsive to such requirements by investing in equipment to monitor and test process contaminants that may pose health hazards to workers and the surrounding community.
Process Control and Instrumentation for Industries
There is a growing trend among Indian firms to purchase automated process control and instrumentation equipment, thereby improving productivity and environmental management and reducing margins for human error. Equipment in this subsection includes process control equipment for controlling emissions of particulate and gaseous pollutants during combustion and instrumentation for monitoring and controlling industrial water and wastewater treatment.
Competitive Analysis
The Indian environmental equipment market is represented by domestic and foreign suppliers. Local/domestic production accounts for 60 percent of the total market, with the remainder being met through imports. There are about 30 domestic producers, most of which have technical collaborations with foreign firms. Although market opportunities are relatively limited now, the presence of several international players indicates the potential for growth and high sales receipts because of the high unit prices for this sophisticated equipment.
The United States is the single largest import source, accounting for about 50 percent of the import market. Japan (with approximately 25 percent), Germany (10 percent), and the United Kingdom (10 percent) are the other market players. It is predicted that the import market will continue to increase while the domestic market share will fall, mainly because of increasing demand for cutting-edge technologies that cannot be met by domestic suppliers. Increasingly liberal import policies will further encourage this trend.
The following are some competitive factors that affect sales for firms engaged in manufacturing, supplying, and servicing environmental monitoring and testing equipment:
Size of the firm. Typically, larger corporations are more sensitive to the size of vendors in environmental monitoring and testing equipment. The size of suppliers in this field might be perceived as indicative of experience, reliability, and capability.
Product sophistication. Product sophistication becomes important to the buyer or end user when the accuracy and sensitivity of the product is of prime importance. Industrial quality control applications, research and development laboratories, compliance enforcement laboratories, and testing facilities are typical examples of such users.
Technology. The deployment of new technologies and rapid improvements in this field make it essential for manufacturers to keep up with the latest developments. Technology options can often influence purchase decisions. For example, firms such as Merck, Hach, Thermax, and Forbes Marshall are often considered more acceptable suppliers because of the technology they offer.
Core competence and specialization. Many firms specialize and develop a reputation for a core competence in a limited field or limited applications. Increasing competition has driven these firms to seek to stand out in particular niche markets. Buyers can then be assured of the best available technology when they deal with such firms.
Pricing structure. This is very important to the small and medium-sized firms for which cost is the most critical factor in the purchase decision. Often, the buyer may have to bypass the best available technology for a lower priced product. Pricing structure is often closely related to the vendor firm’s size and brand image.
Brand image. The brand image is built slowly and steadily through a proven track record. Core competence, firm size, market share, and after-sales service all play an important part in building brand image. Larger firms are more likely to purchase from vendors that enjoy a good brand image.
After-sales service. A good record of after-sales services can play a crucial role in the purchase decision. Equipment that is directly related to the production process typically is critical and will cause production losses if it malfunctions. Consequently, the availability of quick and reliable service is essential to most buyers.
Foreign collaborations. Many Indian manufacturers have formed joint ventures with foreign counterparts for technical support and global marketability. Several franchisees and marketing agents for foreign firms already operate in India and are able to generate substantial sales. Multinational firms and those using foreign consultants and experts are more likely to use vendors that have strategic alliances with foreign firms. Multinational firms may prefer to use the same vendors in each of their global facilities. These firms therefore might be more likely to choose suppliers that have previously established relationships with these end users. This suggests there may be an opportunity for U.S. firms to build sales with large end users in a particular geographic market by establishing relationships with those end users in other geographic markets. This factor underscores the importance of U.S. exporters formulating a global market expansion plan for their products.
