As the amount of waste generated in urban India grows, the CEO of NOVONOUS says this could lead to a waste management market worth more than US$13 billion by 2025, presenting opportunities for investors and suppliers.
India has made progress over the last 50 years from “developing country” status to its new classification as a “newly-industrialised country” in 2015. This recognises its rapid economic growth, population migration from rural to urban areas, and a move to industrial business, like manufacturing.
With this, however, comes an increased in the scale and diversity of waste generated. In 2011, India’s Ministry of Urban Development estimated that the country’s urban cities produced more than 150,000 tonnes of municipal solid waste (MSW) a day, with a view that this would likely double by 2020. In 2014, experts said that from the waste generated, more than 80 per cent was being disposed of “indiscriminately”.
New landfills are not a viable solution, as the volumes of waste expected to be generated would require as much as 66,000 hectares of land. This means that India must look to other ways to deal with its burgeoning waste problem, such as increased resource recovery, waste to energy and organic waste to compost.
Legislation and regulation in the country have been developing to improve waste management, with laws passed in recent years to cover the handling of electronic and electrical, plastic, and biomedical waste streams. But the practical implementation to meet the aims of these laws has proved difficult to achieve.
In September 2014, against this dynamic backdrop, market research company NOVONOUS published its report, Waste Management Market in India 2014-25. This identifies some of the urgent issues around this area and uses data collected in its study reveal trends, potential outcomes, the scope for investor subsidies and incentives, and how government policy is impacting waste management companies and the wider industry.
Cost and policy factors
NOVONOUS CEO Ambarish Kumar Verma says India is facing several key challenges in developing a functional, appropriate waste management sector. One is that the cost of waste management has been increasing gradually over the years, first because of the increasing quantity of waste generated, as urban populations have grown, and secondly, due to the changing composition and quality of waste being generated.
“The addition of more hazardous and toxic matter in the waste has made the proper disposal and treatment process more complex and expensive,” says Ambarish. “Although there is huge potential in the field of solid waste management in India, due to the high amounts of waste generated daily, the realisation of this market is small.”
Ambarish also points to government policy being insufficient when compared against the volumes and kinds of waste being produced.
“National and local policies are not comprehensive enough and there is a need for separate policy framework for different types of waste generated,” he says.
Another challenge Ambarish outlines is the high capital costs involved in participating in the industry. Although there are subsidies available for players interested in setting up waste processing facilities, he says the process of obtaining this support is time and resource consuming.
Nevertheless, the potential of an expanding market of MSW in India is an enticing proposition for investors.
NOVONOUS reports that the volume of MSW generated is directly related to the growth of urban population, which has increased 31.8 per cent in a decade. The generation rate was 68.8 tonnes in 2011. By 2025, the total MSW generated in a year will reach around 164.3 million tonnes from a figure of 83.8 million tonnes expected to be generated in 2015.
“In their present state, city corporations will not be able to handle such huge amounts, hence there is a need to develop the technology and infrastructure required for an efficient waste management system,” states Ambarish. “This is the key factor along with scarcity of land for landfills near metro or tier-2 cities that will drive the growth of MSW management.”
Electronic and electrical waste is also regarded as a significant area for growth. Between them, the government, and public and private (industrial) sectors account for almost 70 per cent of total e-waste generated. Indian households also consume large quantities of electricals and computer- based technology, which is expected to boom.
India is currently generating about 2.7 million tons of e-waste a year and a United Nations Environment Programme (UNEP) report suggests it will increase 500-fold by 2030.
“E-wastes should be seen as a potent resource waiting for technology to find a way to convert millions of tonnes of it to reusable, recycled product. This is going to be the key driver for e-waste market,” adds Ambarish.
To address the country’s waste management issues, the Indian government has turned to programs and policies, with some to cover the correct management of particular growing waste streams. The overarching legislation for the industry is Municipal Solid Wastes (Management and Handling) Rules 2000, created under the Environmental Protection Act 1986.
Due to its increasing population needing more hospitals, healthcare- generated waste was the first for its own legislation with the introduction in 2000 of the Biomedical Waste (Management and Handling) Rules 1998.
The e-Waste (Management and Handling) Rules 2010 were passed in 2011 and came into effect in May 2012, followed by the equivalent for plastic waste in 2011, which bolstered previous legislation, the Recycled Plastic Manufacture and Usage Rules 1999.
More recently, in October 2014 the government launched the Clean India Mission (Swachh Bharat), of which its focus in urban communities is on building individual toilets, community toilets and solid waste management. This also has evolved into a national movement, with the prime minister to participate in a “cleanliness drive”.
Ambarish says that the Clean India Mission is mainly aimed at increasing public awareness about keeping their surroundings clean, with waste management forming a small part of it. However, this could help with the major issue of educating people about the MSW that they throw out.
“The major bottlenecks related to waste management in India are related to waste collection, which is highly dependent on the citizen of the country as they are major waste generators,” he says.
Therefore, although India is trying to work its way out of its waste management problem with new rules, for Ambarish the infrastructure needs to be implemented and the public educated about source separation for recycling to be effective.
With little experience of bringing about such programs, the India Government is turning to private companies for help with its Public Private Partnerships (PPPs).
“There is a dearth of technical and financial expertise in the solid waste management sector of India,” explains Ambarish. “Hence, many municipal bodies and state governments are moving out for the help from private companies to improve the management and delivery process of the system.”
Private and foreign investment
PPPs have evolved from a contractual basis in 1980s to long-term partnerships seen today. However, Ambarish explains that in many cases the private players are completely dependent on the municipality or the state governments for the source of revenue, which means they shoulder the risks of late payments and the potential impact on the delivery of projects.
The Indian Government provided grants to the urban local bodies under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM), which was set up in December 2005 to encourage development of infrastructure services to cope with the growing country’s myriad needs. This has now evolved into the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities program.
However, opportunities exist for foreign companies to enter and work in the Indian market. Ambarish explains that 100 per cent foreign direct investment is allowed under the automatic route for urban infrastructure, including waste management, subject to relevant rules and regulations.
“This is a good sign for international players to enter the Indian waste management sector,” states Ambarish.
Thanks to NOVONOUS’ market analysis and collection of data, its CEO can highlight areas of opportunity in India’s waste services that have potential for private and international expertise and investment.
The Indian MSW management market is expected to grow at a Compound Annual Growth Rate (CAGR) of 7.14 per cent by 2025, while e-waste management market is expected to grow at a CAGR of 10.03 per cent during the same period. India has planned to achieve a capacity of 2.9 million hospital beds by 2025, which will contribute to bio-medical waste management market growth at a CAGR of 8.41 per cent.
“Bio-medical waste and e-waste management is highly stable and more profitable segment of waste management market in India,” says Ambarish. He supports this by drawing attention to the low entry barriers to these sectors and India’s current lack of adequate numbers of facilities to manage both of these waste streams against a huge demand from the local market.
“As a result, it is highly advisable to enter this segment for a new player, whether international or Indian,” Ambarish adds.
As e-waste facilities are normally able to operate with a higher profit margin, this is expected to attract more players into this segment.
Looking to the future
India undoubtedly requires more infrastructure, processes and expertise to manage its waste streams, a source of great potential for investors and private firms. However, as waste service providers around the world have learned, it is public engagement and education that will help the country in reducing the volumes of material disposed of and increasing recycling.
Many existing recycling plants in India are running under capacity, which Ambarish attributes to two major challenges. The first is around waste collection.
He points to the lack of infrastructure for sorting, treatment, recycling and storage of recyclables in urban areas. If addressed, this would increase the volumes transferred to such facilities.
Secondly, Ambarish says there is a dire need for increased awareness around households and businesses about how to dispose of their waste responsibly and reducing how much they throw away.
“The general apathy of society towards waste management is concerning,” states Ambarish. “It not only decreases the chances of employment in this sector, but also jeopardises the entire process.”
He says the first and most important step in any waste management program starts with the general public, who generate it and “must be responsible for appropriate segregation of different wastes”.
“There is an urgent need to change the perception of citizen and remind them of their civic duty through initiatives like the Clean India Mission, without which no innovations will yield any positive results,” says Ambarish.
The NOVONOUS report Waste Management Market in India 2014- 2025 is available to buy from the website. ￼