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India Environmental Export Market Plan
Chapter 5 - Water and Wastewater Treatment

The water and wastewater treatment market in India is estimated to be $1.24 billion. Growing water scarcity and water pollution is one of the most severe and well-recognized environmental problems in India. The enormity of the problem is evident in the fact that the Indian government was compelled in 1994 to declare 19 principal river stretches “grossly polluted.” These stretches are now covered under the National River Action Plan for pollution abatement.

It is estimated that about 85 percent of the urban population has access to safe drinking water and about 46 percent has access to sanitation services. In rural areas, approximately 46 percent have access to a clean water supply and about 12 percent have access to sanitation services.

The Central Pollution Control Board (CPCB) has a comprehensive water quality-monitoring network of 495 stations for surface and ground water in India. An analysis of the data collected by the network confirms that organic and fecal coliform pollution is the most serious form of water pollution in the majority of states because of discharge of untreated sewage. The pollution parameters (including pH, total dissolved solids, and heavy metals) were found to be high in the states of Gujarat, Maharastra, Andhra Pradesh, Tamil Nadu, Uttar Pradesh and the Punjab, indicating heavy industrial discharges. The following sections present brief overviews of the municipal and industrial wastewater treatment conditions in India.

India’s 1991 census shows that there are 23 metro cities (cities with populations exceeding 1 million persons). Surface water is the major source of water supply in major cities. About 90 percent of the population in these cities is supplied by organized water supply. The per capita water supply in the cities ranges from 74 liters per capita per day to 341 liters per capita per day; the national average is 214 liters per capita per day. Total wastewater generation in the top 23 cities is 9,275 million liters per day. About 2,923 million liters per day (31 percent) is treated, while the remainder (6,352 million liters per day or 69 percent) goes untreated and is disposed of in surface water bodies, the land, or the sea. Most of the Indian cities use conventional treatment systems for water treatment, including sedimentation/clariflocculation and rapid sand filter followed by chlorination. Only three of the 23 major cities have primary treatment facilities, while 13 have primary and secondary treatment facilities. The biological systems for secondary wastewater treatment that have been installed by the water supply and sewerage boards of these cities include trickling filters, activated sludge with compressed aeration, activated sludge with mechanical aeration, and oxidation ditch technologies.

Efforts to tackle industrial wastewater were initiated in 1991 to improve the level of compliance in 17 categories of highly polluting large and medium industrial sectors. The compliance rate (installation of adequate pollution control facilities) has improved considerably in these polluting sectors. Small-scale industrial units, however, lag far behind in their compliance.

The water and wastewater treatment market segment accounts for the largest share of the total environmental market in India. Consequently, there are more environmental firms in the water and wastewater treatment sector than any other type of environmental market segment. Table 5.1 presents the approximate number of firms supplying water and wastewater treatment plants in the country with their revenue ranges.
Table 5.1 - Structure of Domestic Water and Wastewater Treatment Industry
Size
Number of Firms
Large (>7.5 million rupees)
50
Medium (2.5 – 7.5 million rupees)
100
Small (<2.5 million rupees)
500
Total
650
Note: In India, an industrial undertaking is defined as a small-scale unit if investment in immovable assets such as plant and machinery does not exceed $720,000. Undertakings having investment in plant and machinery of more than $720,000 are classified as large and medium firms. There is no classification of firms on the basis of number of employees.
Source: EQMS India Pvt., Ltd.

The demand for wastewater treatment systems is fueled by the Water Prevention and Control of Pollution Act of 1974 and the Environmental Protection Act of 1986. The waste treatment equipment/systems to meet prescribed discharge standards represent business opportunities for firms in this sector.

Water and wastewater treatment products are purchased mainly by the following two buyer groups:

The estimated market size for the sector in terms of revenue generation for operating firms was approximately $200 million in 1997-1998. A performance review of leading firms indicates that the growth of sales revenue in the sector for 1997-1998 was about 6 percent. Growth for the next two to three years is predicted to reach 15 percent for the following reasons:

Thus, the 1997–1998 market potential is estimated at $2.2 billion.

Emerging Trends and Market Opportunities

The following are key trends in the water and wastewater treatment market in the municipal and industrial segments.

Municipal Segment

All publicly owned water and wastewater treatment utilities will continue to experience economic constraints because of extremely low user fees for water and wastewater treatment services, which will limit their investment potential. To meet funding requirements, a number of utilities and municipalities are trying to raise resources from the municipal debt market.

The increasing size of the world’s capital market is leading to improved financing of urban infrastructure projects. These projects will require consulting for design, project management, and equipment supply. More information about these projects may be obtained from Infrastructure Leasing and Financial Services and concerned municipalities. (Contact: Infrastructure Leasing and Financial Services, Ltd., India Habitat Center, East Court Zone, Lodi Road, New Delhi 110003, Tel: +91 (11) 463 6637/41; Fax: +91 (11) 463 6651, Attention: Mr. Pradeep Singh, Senior Vice President, Infrastructure Division).

Some of the progressive municipalities in the water and wastewater treatment sector that could be potential clients in the near future include:

Following the privatization trend, water and wastewater treatment projects are expected to be developed on a public-private partnership basis to facilitate the flow of capital to meet demand.

Annual government spending in the urban infrastructure sector is estimated to be about $600 million in the ninth Five Year Plan (1997–2001), which is significantly less than the total requirement. To bridge this gap, government is considering allowing 100 percent foreign direct investment in the water and wastewater treatment sectors. A proposal to this effect stalled in the Indian Cabinet in 2000, but remains under consideration in 2001.

Spending is likely to be higher in the municipal water and wastewater treatment sector than in the industrial sector because of funding from external donor agencies. Since 1997, the total amount of external funding approved in the urban environmental sector, including water supply and sanitation, is equivalent to $2,593 million. The states that received maximum assistance include Tamil Nadu, Karnataka, Maharashtra, and Andhra Pradesh. The World Bank has provided $853 million for urban water supply and sanitation projects in India, which has been the principal source of external financial assistance.

The National River Action Plan (described in Chapter
4) is one of the broadest pollution control programs in
India’s history. It covers a total of 141 towns in 14 states


located along 19 grossly polluted river stretches in India. The program is aimed primarily at enhancing municipal wastewater treatment infrastructure. The total estimated outlay is expected to be about $480 million and is funded fully by the Indian government. Sewage treatment plants account for 41 percent of costs, while intercepting and diverting sewage accounts for about 30 percent. In addition, the Indian government has also approved and funded programs amounting to $135 million for the rivers Gomti, Yamuna, and Damodar. These forthcoming investments offer good business opportunities for U.S. firms that can provide wastewater treatment technology/equipment and services in the municipal segment. (Contact: National River Conservation Directorate (NRCD), Ministry of Environment and Forests, Paryavaran Bhavan, Lodi Road, New Delhi 110003, Tel: +91 (11) 436 2206/2195; Fax: +91 (11) 436 0009, Attention: The Additional Secretary, NRCD)

In 1998, the total market potential for the municipal wastewater treatment segment for India’s 23 major cities was estimated at $650 million.

Industrial Segment

There is considerable improvement in compliance rates for large and medium-sized industrial units that have been identified under the 17 categories of highly polluting industries. As of November 1998, 1,280 of the 1,551 identified industrial units were in compliance with regulatory effluent standards. Consequently, requirements in this segment will be generated mainly by new investments and by non-complying units. Information on non-complying firms may be obtained from the CPCB. (Contact: Central Pollution Control Board, Parivesh Bhavan, East Arjun Nagar, Delhi 110092, Tel: +91 (11) 222 5792/7233; Fax: +91 (11) 220 4948; e-mail: cpcb@alpha.nic.in, Attention: Mr. Dilip Biswas, Chairman).

Because of the resource and space constraints small and medium-sized industrial facilities face in India, packaged treatment units for isolated businesses and common effluent treatment plants for clusters continue to be promising business opportunities.

Numerous common effluent treatment plants are being constructed in India. State governments are expending substantial resources promoting common effluent treatment plants. For example, the Delhi government is constructing 15 common effluent treatment plants for 22 approved industrial estates. Each plant is expected to cost $1.7 million. Fifty percent of the cost will be borne by the industrial units while the Delhi government will meet the remaining costs.

The number of industrial units in these common effluent treatment plants varies from 7 to 2,200 industrial units. In most cases, however, the number will range from 50 to 100 units. India’s common effluent treatment plants typically include screen/grit chambers, equalization tanks, flash mixers, clariflocculators, sand filters, aerators, sludge thickeners, rotary vacuum filters, and activated carbon columns as a part of the treatment chain. For detailed information on common effluent treatment plants in India, contact State Pollution Control Boards. While Indian water and wastewater equipment/chemical firms have made rapid strides in building technological capabilities, there are numerous technology needs in the water and wastewater treatment sector offering good opportunities to foreign firms.

Recently, the Indian government mandated that certain categories of coal-based thermal power plants use beneficiated coal with an ash content not exceeding 34 percent beginning July 1, 2001. This rule has given a considerable push to the demand for coal beneficiation technologies. The demand for wastewater treatment technologies from coal washeries also will increase, leading up to the effective implementation of the above rule. (Contact: Ministry of Environment and Forests, Paryavaran Bhavan, Lodi Road, New Delhi 110003, Tel: +91 (11) 436 4594; Fax: +91 (11) 436 0678, Attention: Dr. G. V. Subramaniam, Director).

Industry is experiencing growing water scarcity. This, coupled with the rising cost of water for industrial use, supports the recycling market in India. Industry (especially large- and medium-scale units) has been motivated to adopt “zero discharge” technology. Although this transition is limited currently to selected large- and medium scale units, it is a definite indicator of the type of business opportunities that are to emerge in the short to medium term.

A number of industrial estates have already started relying on treated wastewater from municipal wastewater treatment plants (e.g., Manali Industrial estate in Chennai). The Tirupur Area Development Project is another indicator of the trend of development of the recycling industry and related business opportunities. In the medium- to long-term scenario, all industrial estate locations where common effluent treatment plants are going to be constructed should offer business opportunities in the recycling segment. All the locations of common effluent treatment plants in the country are potential marketing locations for recycling know-how, equipment, and related services. U.S. firms having expertise in water recycling may acquire a competitive edge in this emerging market sector in India. (Contact: Central Pollution Control Board, Parivash Bhavan, East Arjun Nagar, Delhi 110092, Tel: +91 (11) 222 0844, 222 7233; Fax: +91 (11) 220 4948; e-mail: cpcb@alpha.nic.in, Attention: Dr. S. D. Makhijani, Additional Director).

Competitive Analysis

India’s water and wastewater treatment sector reflects a significant level of technological capability and development; it is becoming more sophisticated each year. The sector is quite competitive and is dominated by joint venture arrangements that feature Indian firms partnering with foreign firms. There are between 210 and 240 successful foreign collaborations in India’s water and wastewater treatment sector. In 1998, 65 U.S. firms had established a presence in the Indian market through their collaborations with domestic partners. European firms, particularly from the United Kingdom, Germany, the Netherlands, and France, constitute the main competitors for U.S. firms. Government funding agencies from these European countries often provide credit and financing facilities for water and wastewater treatment projects to assist their firms in capturing projects.

Municipal water and wastewater treatment and industrial in-process and wastewater treatment operators constitute the two major buyer groups for this sector. At the state level, development corporations are the chief promoters of common effluent treatment plants and are responsible for developing infrastructure for industrial estates. Several state industrial development corporations have already invited private entrepreneurs to participate in the implementation of common effluent treatment plants projects on a build-own-operate or build-own-operate-transfer basis. U.S. firms should consider the opportunities presented by these projects.

At the enterprise level, many firms are following integrated approaches to winning contracts. Domestic environmental firms are able to fabricate equipment in India. Strategically, it is a wise thing to do because the landed cost of imported equipment is about 30 percent higher than the cost of locally fabricated equipment. Therefore, U.S. firms may not find it profitable to design their market strategies around equipment exports but might consider partnering with domestic firms that can manufacture equipment locally.
Table 5.2 - Generic Technology Needs/Business Opportunities in the Industrial & Municipal Water/Wastewater Treatment Sectors
Sector
Technology Required
Industrial Sector
Water (in process) treatment filtration systemsAdvance reverse osmosis/membrane
Dyes and dye intermediates, tanneries, nitrogen fertilizers, pesticides, pulp and paperTotal dissolved solids removal/reduction
Man-made fiber, pesticides, coke-oven electroplating, pharmaceuticalsHeavy metals removal/reduction
Dyes and dye intermediates, petrochemicalsBiological and chemical oxygen
Man-made fibers, textilesDemand reduction, advanced oxidation process (wet oxidation, ultraviolet oxidation)
Sugar, distilleries, pulp and paperFixed film anaerobic bio-methanation systems, energy efficient biological treatment systems, energy recovery
Systems, sludge handling systems
Dyes and dye intermediates, food processing, electroplatingSmall and energy efficient package treatment systems
Pulp and paper, nitrogen fertilizersNitrification/denitrification systems
Pesticides, phosphatic fertilizers, nitrogenous fertilizer, distilleriesSpecial pollutant treatment
Pulp and paperCaustic recovery/color removal systems
Nitrogenous fertilizerFluidized-bed biological treatment/trickling filter
PesticidesToxicity reduction
Coal minesCoal beneficiation plants
Galvanizing industriesAcid recovery systems
Electroplating industriesCyanide treatment, metal ion recovery system
TanneriesChromium recovery systems
Industries located in coastal areasDesalination plants
Small and medium-sized enterprisesCompact and prefabricated packaged systems
All industriesRotary bio disc systems, sequencing batch reactor systems, reciprocating ion exchange and automated chemical dosing systems, systems for oil removal from sludge
Municipal Sector
Water treatment Ultraviolet disinfection
Waste waterAdvanced oxidation systems, energy efficient aerators,
sewerage farming, up-flow anaerobic sludge blanket (UASB)
process
Analytical/Monitoring Equipment for Industrial and Municipal SectorsAuto Analyzers for Phosphate and Nitrogen, Thermo and Municipal Sectors Hydrograph, Total Organic Carbon Analyzer, Electronic Flow meters, Ultra Centrifuge Micropure Filtration Units, Ion Electrodes for Fluoride, Cyanides, NO3 and NH3, Spectrophotometers (ultraviolet-visible and visible-infrared Digital), Continuous pH meter
Source: EQMS India Pvt., Ltd.

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