The purpose of this report is to provide a comprehensive overview of opportunities in India’s environmental technologies market and to present strategies for penetrating the Indian market. It is hoped that it will be an important source of information for U.S. firms seeking to export environmental technologies and services to India.
Rapid economic growth, urbanization, and population growth has caused serious environmental problems in India. Environmental concerns range from pollution that is largely urban and industrial to management of water, land, forests, and energy resources. The increasing magnitude of environmental problems has forced India to initiate programs to augment the country's environmental infrastructure. This action, coupled with actions by the government of India to liberalize and globalize the economy, have produced enormous opportunities for trade and investment in environmental technologies.
This report includes data and analyses derived from research supported by the U.S. Department of Commerce and various other U.S. government agencies. It includes a comprehensive review of data available from Indian, U.S., and other foreign sources. In addition, intensive in-country stakeholder consultations and expert analyses have been incorporated. The research focuses on seven segments of the market for environmental products and services in India and covers market potential, size, growth projections, and available business opportunities. Estimates include both historical market data and projected potential.
The market for environmental products and services in India is still in the developmental stage, because there is a considerable dearth of environmental infrastructure. These factors have produced significant business opportunities in the environmental sector. The demand for environmental products, technologies, and services is expanding due to increased public expectations and improved enforcement of environmental regulations. Based on 1999 calculations, the total Indian environmental technologies market is estimated to be $4.85 billion.
Improved enforcement is encouraging, as Indian courts continue to issue judgements that make pollution-generators accountable for the environmental impacts of their activities. Moreover, a notable development in recent years among large and medium firms is the growing realization that environmental management makes good business sense. Consequently, these firms are becoming more willing to make proactive environmental protection investments.
Starting with the onset of Indian economic liberalization in 1991, the environmental technologies market grew at an average annual rate of 15 percent to 20 percent through 1996. The market experienced a slowdown, however, to 10 percent growth in 1997 and 1998, mainly because of the overall global recession, the Southeast Asian financial crisis, a slow-down in India's industrial production, and, to some extent, political instability. The reduction in demand growth in Indian fiscal year 1997-1998 can be best described as a short-term market fluctuation. In fact, despite slowed growth in overall demand for environmental products, technologies, and services, the environmental consulting segment registered average growth of 27.5 percent. In addition, the government of India increased its spending during the period despite an economic slowdown, and it enacted a number of new pieces of environmental legislation.
The economic recovery in FY 1999-2000 indicates 15 percent growth can be achieved over the next three to four years, producing promising investment opportunities for foreign companies.
U.S. companies in the environmental field should recognize the following areas as possessing the best opportunities over the next three to four years: water and wastewater treatment (common effluent treatment plants, in particular), energy efficiency, stationary and mobile air pollution control systems, hospital waste management, and environmental consulting services.
The energy efficiency and renewable energy market offers immense potential for U.S. companies. The present size of this market is estimated at $2.5 billion. This market includes the equipment leasing market, which is estimated at $500 million and is growing by 12 percent annually. Growing environment concerns and dwindling reserves of fossil fuels are driving the market for clean coal solutions and renewable sources of energy. According to a report by India's Ministry of Non-Conventional Energy Sources (MNES), it is estimated that the total potential for renewable energy is 10,000 megawatts. Moreover, the introduction of "coal beneficiation" rules in 1997/1998 by the Ministry of Environment and Forests (MOEF) created significant demand for coal beneficiation technologies, including integrated gasification combined cycle (IGCC), pressurized fluidized bed combustion (PFBC), and atmospheric fluidized bed combustion (AFBC). According to the rules, beneficiated coal should not have ash content exceeding 34 percent on an annual average basis. There are few international companies operating in this area, so excellent opportunities exist for U.S. firms.
Figure 1 - 1999 Indian Environmental Market by Sector
Source: EQMS India Pvt., Ltd.
The water and wastewater treatment market also offers promising business opportunities for U.S. firms. The market is approximately $1.24 billion. The wastewater treatment market is expected to show moderate growth (approximately 6 percent) over the next two to three years because of increased outlay in India's ninth Five-Year Plan, increased external assistance, and upcoming investments in water polluting industries. Common effluent treatment plants offer another promising business opportunities for U.S. firms. Approximately 86 common effluent treatment plants are at various stages of planning/site acquisition/construction throughout the country.
The air pollution control segment (stationary and mobile source) was estimated at $408 million for 1997-1998. This market is expected to grow 20 percent annually over the next three years. This rapid growth will be fueled by the transportation sector (the enforcement of more stringent vehicular emission standards began in April 2000) and planned capacity additions in the thermal/liquid fuel/gas-based power sector. India's air pollution control industry has made rapid progress and has developed capabilities for manufacturing a diverse range of air pollution control equipment to manage suspended particulate matter. This market is dominated by joint ventures of Indian firms with foreign companies. The introduction of stringent vehicular emission standards (the aforementioned April 2000 enforcement tightening in addition to Euro I and Euro II requirements due to take effect in April 2005) has opened potential opportunities in the following areas: alternative fuels, multi-point fuel injection systems, exhaust analyzers, testing equipment and catalytic converters.
Municipal solid waste collection and transportation is not currently a major concern in the private sector because municipal corporations and urban local bodies are handling these functions. However, the proposed enactment of the Municipal Solid Waste Management and Handling Draft Rules of 1999, the creation of a more investment-friendly environment, and increased financial assistance from urban infrastructure financing institutions support projections of modest growth for sanitary landfill/composting and waste-to-energy plants. Enforcement of the above-mentioned draft rules will produce enormous business opportunities for U.S. firms. The rules propose the mandatory establishment of composting/sanitary landfill facilities by municipal corporations within a specific time frame.
There are vast opportunities in hazardous waste management including technology, equipment, and services. The market size was estimated to be around $102 million in 1999. The market is growing at an estimated 7 percent per year. The market has relatively few actors (domestic or international); therefore, there is tremendous opportunity for U.S. companies. Common hazardous waste treatment, storage, and disposal facilities offer strong business potential, because several state governments have initiated programs to remediate sites. Because this is a new market, there are wide technology gaps at the domestic level, thus offering strong potential for U.S. firms. This is particularly true given U.S. firms' leadership in hazardous waste management.
Issuance of the Bio-Medical Waste Management and Handling Rules of 1999 boosted the demand for hospital waste management technologies and services. Demand for this sub-sector could grow at 10 percent over the next few years, assuming effective enforcement of the new rules.
The market for environmental monitoring and control equipment is predominantly in the public sector; it accounts for only about 1 percent of the total market at an estimated $59 million. Short-term annual growth projections are 7 percent to 8 percent.
The environmental consulting market is about $124 million. Indications are that the market will continue growing at a rapid rate (around 20 percent) over the next three to four years. The market is highly competitive, price sensitive, and dominated by small firms.
Market Strategies for U.S. Firms
By 1998, between 300 and 350 foreign collaborations had been established in India's environmental technologies market. The U.S. share of these collaborations was 33 percent. Notably, the market is more receptive to U.S. technology than that of European competitors. Partnering with Indian companies, ensuring adaptability of U.S. technologies and equipment under Indian conditions, and being actively involved in public–private partnership projects are key parameters for success by U.S. firms seeking to penetrate or increase market share in India.
The report outlines key issues related to opportunities for U.S. firms interested in penetrating or expanding market share in India. Selecting a knowledgeable local partner, choosing an appropriate geographical location, designing an effective marketing and sales strategy, and having a long-term perspective and commitment are some of important factors for success in India’s environmental technologies market.