India’s Air Pollution Problem: Government Initiatives and Investment Opportunities
By Pritesh Samuel
As India continues to expand its economy through rapid industrialization, the government faces an uphill task of cleaning its air, particularly in the main cities of Delhi, Mumbai and Kolkata. While Delhi has been in the limelight for being the most polluted, especially during the winter months, smaller tier II cities in the country fare worse. In data compiled by the Central Pollution Control Board (CPCB) smaller cities such as Raipur, Ghaziabad and Allahabad had Particulate Matter 10 (PM10) levels of 225 or worse. The World Health Organization (WHO) prescribed safe limit for PM10 is 20. A report by WHO in May 2016 also showed that Gwalior, Patna and Raipur had overtaken Delhi in deteriorating air quality. Further data also showed that cities in southern India fared much better than cities in the north. Between 2011 and 2015, data showed that Delhi’s air quality was worse than Beijing and Shanghai in China.
While there are several factors that contribute to smog including weather, the burning of crops, wind and temperatures, India’s economic growth has been the main factor. The Indian government in 2015 launched the Air Quality Index (AQI) to better communicate and monitor air pollution levels. This also helps people understand the levels of pollution. Public anger has also forced the government to act. In October, after the Indian festival of Diwali (where firecrackers are used), Delhi faced its worst smog in 17 years for around two weeks. Visibility dropped and the government shut down schools while companies allowed employees to work from home. Prior to that, the Delhi government introduced an odd-even scheme allowing vehicles on roads on alternate days depending on their registration number. All public transport vehicles such as buses, delivery vehicles and taxis have to run on compressed natural gas (CNG) while commercial vehicles more than ten years old are not allowed in the city. The government also has placed restrictions on diesel fueled vehicles which has disappointed domestic and foreign car makers affecting sales. The results have had some impact. While Delhi remains the most polluted, it has improved. Bangalore for instance recorded an increase in vehicle registrations and a higher pollution rate. The developments show that the government will need exercise the same stringent rules in Delhi with other Indian cities. Most recently, Swedish furniture maker Ikea, decided to move its corporate office to Bangalore from Gurgaon (National Capital Region) citing air pollution; however if Bangalore continues the trend, the company will have to consider relocating again.
Companies Pitch In
When the air quality in Delhi was severe, multinational companies took several steps to protect employees. Air purifiers were installed in offices, while others provided masks. Several others allowed employees to work from home or provided transport such as taxis or buses for employees to commute to and from offices. These measures are expected to continue in the near term and companies operating in Delhi and the surrounding areas should consider measures for their offices.
While earlier, mainly expats bought air purifiers and masks, this year, air purifier sales increased by up to three times, with major shortages. Manufacturers have increased capacity; one company increased shipments from its Thailand factory by 50 percent. Similarly, face masks are in high demand. One mask company sold 5000-8000 per week as compared to 300 to 400 during the same period last year. Stocks have been sourced from Singapore, China and South Korea. E-commerce websites have also limited two masks per customer due to high demand.
Opportunities for Investors
Recycling: India still has a long way to go to address its environment and pollution problems but progress is being made. More companies are using waste and turning it into something that can be used. Several companies are using discarded plastic bottles to turn into polyesters fabric which is used for packaging for automobile, food, beverage and pharmaceutical products among others
Landfills: India does not have a proper waste management system. Most of the waste gets dumped into huge landfills. While some cities attempt to segregate waste, more often than not, it isn’t. Waste management companies can fill the gap. In fact a local company is using waste in landfills to generate power. Waste from such landfills can be used as a substitute for conventional fossil fuels such as coal when in short supply.
Air purifiers/Face masks: While the industry is still new, the rise in demand, particularly in Delhi shows the potential for growth. Analysts say that the industry is still in its infancy and many consumers remain uneducated on which type of purifiers or masks to buy. This year itself several new companies have entered the sector. As consumers learn more about such products, investors can make inroads and supply such products to a demanding population.
It’s a known fact that the major cities like Delhi and Mumbai contribute a significant amount to the country’s GDP. This is a pattern that is continued to expected grow; the deterioration of air quality is a direct impact of this growth and while the government has come up with policies to address the issue, more will need to be done. The government established the National Green Tribunal under the National Green Tribunal Act 2010, which allows the tribunal special powers to resolve cases in relation to the environment, natural resources and forests. The tribunals has already passed several orders, including shutting down of polluting factories, cancelling entertainment events and looking after pollution in rivers among several other issues. These are the sort of executive orders that government will have to take to tackle pollution. While the situation is concentrated in Delhi and other cities in northern India – the cleaning up of the air will have to be nationwide effort with the help of government mandated rules. As with all things in India, implementation does not happen overnight and takes time. But with the right policies in places, it can make a significant difference.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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