Trade Liberalisation in Environmental Goods.ppt

Trade Liberalisation in Environmental Goods

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 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)

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)
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

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. 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

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$)
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

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