Indian Water Industry
India faces a desperate situation of water shortage. Its fragile and finite water resources are depleting while the demands for water from various sectors of the economy are rapidly rising. In recent years, the industrial and domestic sectors have realized this disparity in the supply and demand. With the New Economic Policy launched in 1991, the government tried to lead to market-based approaches and privatization of urban water. The National Water Policy drafted last year looks at water as an economic good and looks at numerous macro and micro initiatives in this regard. If you are in the Indian water industry, you are in the right place at the right time.
India has devoted substantial resources to the water supply and sanitation sector, significantly increasing its commitment since 1980 with the launch of the International Drinking Water Supply and Sanitation Decade. Today, drinking water investments constitute about 3% of the national budget. Due to these steps, today 85% of the urban and 75% of the rural population has access to public water supplies. 48% of the urban population and 36% of the rural population has access to sanitation services. But clearly, there is a lot of scope and opportunity to do more.
The Indian Water Industry is on the crossroads today. In a developing country with huge requirements for water recycling and purification of drinking water, there is a huge scope for growth. The total Indian water market is estimated to be about USD 15 billion. While the government sector contributes about 50% of this, the private industrial sector provides the remaining business. The overall market is growing at 18% every year.
In 2003, the Indian Government announced the mother of all projects - interlinking of major river networks all over the country, thereby connecting the water-deficit and the water-abundant areas. The project valued at over USD 100 billion is one of the largest in the world. It would kick start the economy and bring a huge set of requirements for equipments and construction.
The water treatment market in India is seeing immense expansion. While no reliable published figures are available, EverythingAboutWater estimates the total water and wastewater treatment market size to be about USD 420 million. It is growing at about 18% annually with certain segments like the industrial and drinking water segments seeing even higher growths.
- Increased awareness about drinking water quality and health
- Decreasing water quality and users having to go for ground water
- Environmental pressures on wastewater discharge from govt. pollution control boards
- Reducing availability of water forcing users to go for reuse & recycling of water
- General Industrial and Economic Growth particularly in chemical, pharmaceutical, power plants, food and textile industry
The industry is currently highly fragmented and unorganized in nature. It can be split into thee categories:
- Large Players like VA Tech Wabag, Degremont, Hindustan Dorr-Oliver, Paramount, Ion Exchange, Thermax etc
- Medium Sized Players like Doshion, Aquatech, Fontus Water, Driplex, TEAM, Ions Hydro
- Small Players over 500 in number
The water treatment industry is largely concentrated in certain geographical pockets like Mumbai, Pune, Chennai, Hyderabad, New Delhi, Kolkata and Ahmedabad. Some plant manufacturers are present in other areas, but this number is limited.
The market knowledge and skill has been increasing in recent times. Most foreign manufacturers and products are commonly available in India now. The market is gradually shifting from chemical treatment and DM plants to membrane technology. Still, there are many huge segments like power plants and refineries that continue to use DM technology. The concept of wastewater recycling and zero discharge systems is growing in a big way in recent times.
The government sector is primarily involved in the raw water treatment and the sewage treatment operations. On the other hand, the private industrial sector includes equipments for clarification, sludge treatment, aeration, disinfection and filtration. Conventionally, the market has used demineralisers for treatment. However, over the last few years, Reverse Osmosis technology has grown in the market and gradually replaced DM. Newer technologies like Ultrafiltration and Electrodialysis are also entering the market now.
The market has undergone a tremendous change in the last few years. Today, there are a dozen medium-sized companies who have rapidly increased their operations and won a number of projects. Also hundreds of small system-integrators have come up all over the country, addressing local requirements.
There has also been a geographical decentralisation that has taken place. Earlier the water treatment industry was largely concentrated in Maharashtra. Over the last ten years, pockets of concentration have started all over the country in Delhi, Chennai, Calcutta, Ahmedabad and Hyderabad. This has had a positive and negative impact. While the market has grown and costs come down, at the same time, the quality and reliability of many of these suppliers has been suspect.
In the last few years, many international majors have also entered the market. While huge players like Veolia Water, Suez de Lyonnaise (Degremont) and VA TECH Wabag are present in the market, chemical majors like Nalco and GE Betz-Dearborn also have operations. Indigenous development of various treatment vessels like resins, RO membranes and vessels have reduced costs and made various technologies easily available on a mass-scale. The other interesting trend in the market has been the move towards standardization of treatment systems as standard DM and RO plants have become more common over the last two years.
A number of factors are fuelling growth in the market. Rapidly rising population has led to increased requirements for drinking water and sewage treatment. While this is largely in the urban areas at the moment, this could shift to smaller towns and villages in times to come. At the same time, water scarcity has led to many industries going in for water recycling systems to meet their requirements. At the same time, there is a growing awareness of environmental issues among industry as well as the public. Widespread coverage of environment issues by the media and NGOs has forced industries to install water treatment equipment to prevent social and legal action against them.
The government has also got into the action by imposing stringent legislations regarding wastewater treatment. There is also a compulsory requirement of Environment Clearances from Pollution Control Boards at the Centre and the states. The recent Supreme Court directive to move polluting units out of Delhi is also likely to act as an impetus to future sales of water treatment equipment. Also at the same time, many existing treatment plants would need to be replaced or upgraded to meet with more stringent standards.
Drinking water problems in India are quite different from those in developed countries. The main concern is with disinfecting the potable water at the point of use. Traditionally, the point of use market has been dominated by ultraviolet purifiers and filters. One company Eureka Forbes holds over 50% of the total purifier market with their UV purifiers, based on their excellent direct-marketing and service network. Industrial majors like Ion Exchange and Thermax have tried entering this market, but with limited success. In the last year, domestic reverse osmosis purifiers have struck the market and have been hugely successful. Recent advancements in nanofiltration and ultrafiltration are now entering this area and offer future opportunities.
One big area of growth has been the increase in bottled water plants in India. With liberalization and increased awareness of water quality, hundreds of bottled water brands have entered the market. The USD 250 million bottled water market is growing at the rate of 75-80% and a large number of reverse osmosis plants have come up in the last two years. With multinationals like Pepsico and Coke getting established in the market, the quality and technology in their plants has improved.
Indian manufacturers have also tried to export and build their presence in overseas markets. Treatment plants have been exported to the Middle-East and South-East Asia.
The contribution of membrane desalination plants is progressively increasing. A number of reverse osmosis desalination plants are being installed by industries to meet their increasing water needs. In 1999, a 4500m3/day capacity RO plant has been commissioned at Sikka for Gujarat Electricity Board by Ion Exchange. A 10,000m3/day seawater RO plant has been commissioned by Thermax for NIRMA at Bhavnagar using Hydranautics membrane. RO has also been employed by many industries for waste water recycling. A 12000m3/day waste water RO plant has been recently commissioned by Aquatech(Asia) in Rashtriya Chemical Factory, Mumbai. Ion Exchange has commissioned another 3000 m3/day waste water RO plant at IFFCO, Phulpur. Since early nineties, hundreds of membrane based brackish water desalination plants of capacities of 10 to 100 cubic meters per day were set up for providing safe drinking water to selected problem villages in the states of Gujarat, Rajasthan, Tamil Nadu and Andhra Pradesh.
On the other hand, several thermal desalination plants have also been operating in the coastal areas of the country for inhouse use by the industries. A 48000 cubic meters per day Multi-effect Desalination plant has been commissioned in 1999 at Reliance Petrochemicals Complex in the western coast of the country at Jamnagar. The industrial giant Larsen & Toubro (L&T) has also commissioned a thermal desalination plant for their cement industry.
The industry still faces constraints moving ahead. The regulatory bodies lack the teeth to enforce many of the guidelines and the mandatory requirement of a functional treatment plant gets bypassed sometimes. Polluting industries have adopted an uncaring attitude and it has required active support of many NGOs to get them to act. There is still a large capital investment required for many treatment plants and most industries try to avoid it or go for a short-cut solution. Awareness and recognition of newer technologies has been slow in coming.
In recent times, the technical expertise and know how of the top water treatment manufacturers is pretty standard. Therefore, their success in getting big project orders has been dependent on their pricing, project execution skill and process engineering ability. This trend is likely to increase in the coming years.
The Indian water industry is today on the crossroads. In a developing country with core requirements, a need to play socially responsible and proactive role is essential. With proper direction from the government and appropriate steps from the industry leaders, it is poised to take off in the future.