Trade Liberalisation in Environmental Goods Experiences from India

1
Trade Liberalisation in Environmental
GoodsExperiences from India
2
Format of presentation

• An overview of Indian environmental industry
• Autonomous liberalization
• Challenges and concerns
• Environmentally preferable products

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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, RD,
  specialized treatment technologies for complex/
  special pollutants
• Traditional strength (conventional air pollution
  equipment / waste water management/
  environmental consulting/ solar cells and
  hydraulic turbines)

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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

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The Market (Estimates in US millions)
2000 2001 2002 (estimated)
Total market Size 3294 3788 4166
Total Local Production 2061 2272 2499
Total Imports 1233 1516 1667
Imports from the U.S. 431 530 583
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Autonomous Liberalisation

• FDI with 100 foreign equity allowed through
  automatic route
• Preferential tariffs for pollution control
  equipments
• Duty exemptions for equipments for RD 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)

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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)
 
 
 
 
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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.

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Inherently environmentallyfriendly 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)
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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