Trade Liberalisation in

Environmental Goods

Experiences from India

Format of presentation

 An overview of Indian environmental industry

 Autonomous liberalization

 Challenges and concerns

 Environmentally preferable products

Development of Indian environmental
industry

Growing awareness
 Health issues related to pollution and increased judicial
activism
 Industry realizes that being environmentally responsible
is being economically sound.

Improved enforcement of legislation

 1974: Water (Pollution and Control of Pollution) Act
 1974: Central Pollution Control Board
 1985: Ministry of Environment and Forests
 1986: Environment Protection Act
Composition of Indian environmental
industry

 Equipment Suppliers – Specialized

 System Suppliers
 Chemical Suppliers
 Engineering, Procurement and Construction
Contractors/Lump-sum turnkey Contractors
 Consultants
 Build Own Operate and Transfer (BOOT) and Build
Own Operate (BOO) Operators
 Analytical Services – Laboratories etc
 Characteristics of Indian environmental
industry

 Industry dominated by small and medium size units

(Large- 100 no’s, Medium - 250 )

 Market dominated by end of the pipe treatment plants

 Lack of resources: Deficient in capital, R&D, specialized

treatment technologies for complex/ special pollutants

 Traditional strength (conventional air pollution

equipment / waste water management/ environmental
consulting/ solar cells and hydraulic turbines)
Characteristics of Indian environmental
industry…

 Presence of foreign companies (Licensing,

Joint ventures, and wholly owned subsidiaries)
 Foreign collaboration (US - 33 %, Germany 14 %,
UK 13 %, Canada 7 %)
 Important Trading Partners (Import): USA, Germany,
Japan, UK, Canada, Australia
 Important Trading Partners (Export): Middle East,
Vietnam, Indonesia, and other countries in South East Asia
 The Market
(Estimates in US $millions)

2000 2001 2002 (estimated)

Total market 3294 3788 4166

Size
Total Local 2061 2272 2499
Production
Total 1233 1516 1667
Imports
Imports from 431 530 583
the U.S.
Autonomous Liberalisation

 FDI with 100% foreign equity allowed through automatic

route
 Preferential tariffs for pollution control equipments
 Duty exemptions for equipments for R&D projects and
public funded research institutions
 Preferential tariffs for renewable energy equipments
 APEC list:
Average Bound rates- 25% to 40% (35%)
Average Applied rates-10 % to 25% (22%)
Challenges and Concerns

 Availability of funds/investment

 Availability of technology and its diffusion

 Absence of strict enforcement of quality parameters for imported

capital equipments

 Use for environmental purposes:

Electricity meters, liquid flow meters, heat exchangers, conveyors
and centrifugal pumps are general industrial equipments

 Tackling tariff anomalies i.e. a structure where duties on inputs

would be higher than on finished goods
India’s Trade (Goods in APEC list)
(million US$)

Categories of goods India’s trade in all the items mentioned in APEC list

Imports Exports

Air pollution control 135.71 73.25

Water pollution control 237.45 155.83

Solid/ hazardous waste management 137.32 56.14

Remediation/ clean-up of soil and water 0.89 0.1

Monitoring/ analysis and assessment 588.00 108.39

Noise/ vibration abatement 39.87 37.57

Potable water treatment 62.54 37.57

Other recycling systems 25.52 3.56

Renewable energy plant 32.96 41.41

Heat/ energy management 8.09 6.62

 Challenges and Concerns…

Export opportunities for Indian companies

 Trade data in environmental goods APEC list

-Imports US$ 1340 million
-Exports US$ 610 million

 Technology licensing agreements with market restriction

clauses (Indian companies have an edge in pricing structure )

 Lack of proper marketing and distribution network

 Applied tariff rates in developed countries are already at a

nuisance level.
Inherently environmentally
friendly goods

 Environmentally friendly Natural products

 Non agricultural products
 Superior to other products

 Jute
 Coir
 Rattan and bamboo
 Natural and vegetable dyes
 Trend in exports from India (million US$)

Year Jute Coir Bamboo/ Cotton

Rattan handloom

1998/99 126.57 64.48 - 455.98

1999/00 119.96 65.88 3.91 456.94

2000/01 150.21 66.19 3.99 465.68

2001/02 133.33 - 4.16 432.97

The way forward

 Balanced approach needed to ensure flow of trade gains,

technology and development of local industries.
 General industrial items should not get place in a possible
list of environmental goods.
 Transfer of technology at affordable terms. The Working
Group on Trade and Technology Transfer could look into
the relationship between trade in environmental goods
and the transfer of clean technology.
 Less than full reciprocity for developing countries