Download Trade Liberalisation in Environmental Goods Experiences from India

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 $millions)
2000
2001
2002 (estimated)
Total market
Size
Total Local
Production
Total
Imports
3294
3788
4166
2061
2272
2499
1233
1516
1667
Imports from
the U.S.
431
530
583
Autonomous Liberalisation
 FDI with 100% foreign equity allowed through automatic
route
 Preferential tariffs for pollution control equipments
 Duty exemptions for equipments for R&D projects and
public funded research institutions
 Preferential tariffs for renewable energy equipments
 APEC list:
Average Bound rates- 25% to 40% (35%)
Average Applied rates-10 % to 25% (22%)
Challenges and Concerns
 Availability of funds/investment
 Availability of technology and its diffusion
 Absence of strict enforcement of quality parameters for
imported capital equipments
 Use for environmental purposes:
Electricity meters, liquid flow meters, heat exchangers,
conveyors and centrifugal pumps are general industrial
equipments
 Tackling tariff anomalies i.e. a structure where duties
on inputs would be higher than on finished goods
India’s Trade (Goods in APEC list)
(million US$)
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/
Rattan
Cotton
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