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Trade Liberalisation in Environmental Goods Experiences from India.

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Presentation on theme: "Trade Liberalisation in Environmental Goods Experiences from India."— Presentation transcript:

1 Trade Liberalisation in Environmental Goods Experiences from India

2 Format of presentation An overview of Indian environmental industry Autonomous liberalization Challenges and concerns Environmentally preferable products

3 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

4 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

5 Characteristics of Indian environmental industry Industry dominated by small and medium size units (Large- 100 nos, 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)

6 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

7 The Market (Estimates in US $millions) 200020012002 (estimated) Total market Size 329437884166 Total Local Production 206122722499 Total Imports 123315161667 Imports from the U.S. 431530583

8 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%)

9 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

10 Indias Trade (Goods in APEC list) (million US$) Categories of goodsIndias trade in all the items mentioned in APEC list ImportsExports Air pollution control135.7173.25 Water pollution control237.45155.83 Solid/ hazardous waste management137.3256.14 Remediation/ clean-up of soil and water0.890.1 Monitoring/ analysis and assessment588.00108.39 Noise/ vibration abatement39.8737.57 Potable water treatment62.5437.57 Other recycling systems25.523.56 Renewable energy plant32.9641.41 Heat/ energy management8.096.62

11 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.

12 Inherently environmentally friendly goods Environmentally friendly Natural products Non agricultural products Superior to other products Jute Coir Rattan and bamboo Natural and vegetable dyes

13 Trend in exports from India (million US$) YearJuteCoirBamboo/ Rattan Cotton handloom 1998/99126.5764.48-455.98 1999/00119.9665.883.91456.94 2000/01150.2166.193.99465.68 2001/02133.33-4.16432.97

14 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

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