Green-minded" India could use cost-conscious Hong Kong firms

Growing awareness among India's state government, industries, general public and the media on the need for a "green" industrial environment is creating numerous opportunities for Hong Kong companies.

The Indian government has already embarked on a series of incentives, including concessions on tariffs and excise duties and exemption from tax on capital and depreciation of "green" projects. The authorities are also keen to provide financial support for projects involving solid waste management and sewage treatment.

The model is the Tirupur water system in Tamil Nadu, which is vital to India's largest centre for cotton knitwear production. This first public-private partnership project in 2006 involved the construction of two new treatment works to provide a daily supply of 185 million litres of portable water - and was recipient of a distinction in the Global Water Awards 2007.

Among the sectors in which Hong Kong firms can take a significant role is waste water treatment which is one of India's top environmental issues.

While Indian firms are able to draw on technology and sound development, with some 500 joint ventures with foreign partners, there's a particular need for lower cost equipment for waste treatment.

Equipment for waste treatment.

Hazardous waste seperated out.

Locally-based 3 E Environmental Solutions (a company involved in providing equipment and technology for waste water treatment) believes there are immense opportunities, especially for Hong Kong and Chinese mainland companies, since they appear to have the technology to produce equipment at low cost.

3 E points out that Chinese mainland research is more advanced than Indian studies in the fields of membrane filtration, bacteria culture research and aeration equipment.

There are also excellent opportunities in the energy waste segment, particularly where it comes to monitoring and providing solutions for energy conservation.

Going ahead with partnership deals

As regards entering the Indian market, many international firms prefer to collaborate or partner with Indian counterparts. Some 150 US companies have already established a presence in the Indian market by taking this approach. Since the landed cost of imported equipment is about 30% higher than the cost of locally fabricated equipment, international firms can provide design, technology and processing, while the Indian partner can manufacture the equipment locally.

The main "buyers" involved in the sector include municipal authorities, state development corporations, state industrial development corporations, SEZ owners and industrial cluster developers.

The need to combat hazardous waste and the management required to do so, is another priority for the Indian government. There is a lack of common facilities so an increase in the number of illegal dump sites has been a problem for authorities.

A dealer sorts through different types of waste.

Various states are now facing this issue by creating quality facilities. For example, four hazardous waste management facilities are in the process of being established in Tamil Nadu in 2007/2008. There, opportunities exist for Hong Kong and Chinese mainland companies to either supply the relevant equipment or the technology.

Hospitals may also be in need of technologies to assist in disposal of medical waste. For example, the UK sent a delegation to meet the responsible government departments to showcase its strengths and offer solutions for waste management.

Opportunities exist for technologies involving specially-equipped vehicles and components for collection and transportation; secure tanks, containers and liners for storage; bailers, compactors, shredders, and protective gear for handling and separating; innovative incinerators and autoclaves for treatment of hazardous, biomedical and food waste; industrial effluent treatment.

Need to replace older methods with e-waste options.

According to Dr Amiya Kumar Sahu, president of the National Solid Waste Association of India (NSWAI): "the Indian environmental protection technology market offers huge opportunities to Hong Kong companies. They can enter the Indian market through partnership with local firms since many Indian companies like Econ Pollution Control Pvt Ltd, Earth Crop Bio Fertilizers Pvt Ltd, Otto Waste Systems (India) Pvt Ltd, Prince Container Pvt Ltd, Caryaire Equipments (India) Pvt Ltd and Gitanjali Envirotech Pvt Ltd have either formed joint ventures with global firms or are trying to enter into technological agreements with global players."

Import and export businesses related to this segment are conducted mainly under the HS codes 8416, 8417 and 8419. When it comes to furnace burners for liquid fuel, pulverised solid fuel, gas, mechanical stokers, grates, ash discharges and similar parts, the main imports arrive from Germany.

Trade with the Chinese mainland in the environment protection segment has jumped from a meager US$480,000 during the year to 2006 to US$5 million the following year. Direct imports from Hong Kong in this segment were at US$10,000 in 2007.

As to India's demand for industrial or laboratory furnaces and ovens, the Chinese mainland is, in fact, the key production base, with a share of US$36.8 million compared with a total import value of US$127 million. It's followed by Germany, the US and Italy. However, imports from HK in this segment witnessed a downtrend of 61.5% in 2007, reflecting the uptake by the Mainland.

Refuse compactor.

Dump placer.

There are very few companies in India that are addressing the needs of the tech-related waste segment. Companies like Trishyiraya Recycling and Infotrek Syscom Limited are currently providing e-waste management solutions. Hong Kong companies can either partner with such firms or open their own offices or tie-ins with state boards to offer solutions.

A number of specialist opportunities are worthy of note in the sector. Investment in the Indian environment protection solutions field is likely to see excellent returns.

According to market estimates, the US Agency for International Development (USAID) and the Confederation of Indian Industry, with assistance from the ICICI banking group, is to set up a US$250 million fund to support ventures in eco technologies.

Hong Kong companies can either invest in such funds directly or in individual recipient companies.

Recently, Pesco Beam Environmental Solutions, which is involved in waste oil recycling and alternate energy systems, received an investment of about US$ 8 million from Indian private equity firm UTI Ventures. According to Raja Kumar, CEO and MD of UTI Ventures: "investors are chasing these opportunities. Globally, many clean energy funds have been raised to invest in this sector."

With Hong Kong expertise well equipped to match such investment, a new door is opening for the territory's venture capital firms in the Indian environment and infrastructure sector.

from Prem Behl, Mumbai Consultant

Images courtesy of:
National Solid Waste Association of India
Empa
Toxics Link

Source: International Market News

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