31 March 2009 00:00 [Source: ICB]
Environmental legislation for chemicals and other sectors in India has been in place for decades. But enforcement is patchy, especially among smaller companies
WITH AN average growth rate consistently around 6% over the past decade, the Indian economy has proven itself to be one of the fastest growing in the world. Even in the current uncertain climate, an economic growth rate of 7% is anticipated for 2008-2009, according to data from the Central Statistical Organisation (CSO).
As the economy has grown, so has the perception that not only cheap labor, but also lax or nonexistent environmental legislation gives Indian businesses an important cost advantage. The reality, however, is complex. Over the years, the idea that there has to be a trade-off between environmental quality and economic growth has diminished, and people have come to believe that the two are necessarily complementary.
Industry-specific emission standards have been developed for iron and steel plants, cement plants, fertilizer plants, oil refineries and the aluminium industry. The standards prescribed for pollution levels in air and water in India are similar to those prevailing in many developed and developing countries. But although there is no shortage of legislation, implementation and effective control have been inconsistent.
Environmental activist Rama Kumar has spent seven years with Greenpeace in India and is now a freelance campaigner.
"There is no vision," he says. "Things are not happening because of a lack of political will. Central government makes one umbrella policy framework and based on that the state governments develop their own legislation. But there is no long roadmap which drives industry towards clean production and improved processes."
THE SPECTER OF BHOPAL
Kumar is also concerned by the slow pace of change - the Chemical Accidents Rules (on emergency planning, preparedness and response) date from 1991, seven years after the Bhopal chemical disaster. "Greenpeace has been campaigning for 20 years. There has been some progress over the last six or seven years, but it's a case of too little, too late, because the process is very slow." He also questions the fundamental impact of the Bhopal disaster on political consciousness.
"There's no doubt that the Bhopal issue has made people aware of the impact of chemicals on the environment and human health," he says. "But in real terms, India has not learnt any real lessons from the tragedy. It helped as far as legislation is concerned, but not in terms of real implementation."
According to Kumar: "There are a thousand [potential] Bhopal kind of situations happening right now across India, and it's simply because the government isn't paying attention."
Enrico Polastro, vice president and senior industry specialist at management consultant Arthur D. Little, is a little more sanguine. "Everything is relative," he says. "Certainly, environmental legislation in India is less stringent than in Europe, but controls are not non-existent, and they are tightening gradually."
When it comes to enforcement, however, Polastro agrees that there is still some way to go. "Enforcement is uneven - it depends on which state or part of India. Control standards vary between large companies and the 'informal sector' - those businesses with fewer than 50 employees. Legislation is likely to be applied more stringently to big companies."
Global silicones major Dow Corning has had a presence in India for more than 30 years. In 2006, the firm responded to the growing market with the inauguration of a large manufacturing site near Pune, in the state of Maharashtra.
Dow Corning's Raj Kapur, chairman and managing director in India, stresses the importance of environmental awareness. He rejects suggestions that less stringent environmental regulation has had a bearing on the company's environmental stance.
"Sustainability is an area we anticipate becoming more important in the future. Research we undertook a few years ago showed that manufacturers believe the development of 'green' or 'environmentally-friendly' products is the most important environmental issue they face today.
"No matter where we do business in the world, we believe in adhering to and complying with the laws of the land. Legislation and regulation are in place to protect the interests of the community, the customers, the employees and of course the business. Worldwide, we follow the directives of the Responsible Care initiative, and this includes our India operations as well."
Kapur adds that global practices on the environment, health and safety are applied by Dow Corning at its Pune facility. Through its efforts to be a responsible member of the community, it enjoys a good relationship with the people who live close to the site.
While global corporate standards and a need to maintain corporate social responsibility levels may keep the larger companies in line, policing the mass of small businesses in India is a major problem for the authorities. An estimated 70% of the country's total pollution is attributed to small and medium-sized enterprises (SMEs), according to the government. More than 4m units across the country account for around 40% of industrial production and are second only to agriculture as an employer.
Not only is this huge and diverse range of businesses almost impossible to monitor, there is also a reluctance to come down too hard on a sector that has lifted so many Indians out of poverty. Small businesses are more likely to have out-of-date processes, and curtailing emissions is more costly in comparison with fine-tuning the newer technologies employed by global players.
Stringent enforcement is seen as something that can hit productivity and put the viability of the enterprise at risk. "It's a huge part of the economy," Polastro remarks. "Putting them out of business would create mass unemployment."
However difficult industry may be to police, limiting deterioration of India's natural environment is crucial to this crowded nation of over 1bn. Significant reductions in soil and water quality could devastate not only the country's forests and biological diversity, but, also vital agricultural areas. Loss of natural resources keeps people in poverty even as the national economy grows.
As an environmental campaigner, Kumar believes that change will come because the public demands it.
"I wouldn't say that people believe that economic growth is important and that other things can be neglected - it's not like that," he says.
"It's actually about what kind of choices people have. We need to create educational awareness and a market where people have the opportunity to buy environmentally friendly products. If people start demanding green products, then companies and industry are forced to provide them.
"Once that demand and supply have been created it will change from the political side as well."
Malini Hariharan comments on developments in her India Chemicals Blog
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