Hariharan Subramaniam, Chief Operating Officer of Everything About Water tells Sarika Malhotra of Business Today about the major challenges and opportunities in India's water sector.
Q. What is the water situation in India?
A. India will become one of the top 6 Water Scarce Countries by the year 2025. Annual per capita availability of water will reduce to 950 cubic metres and the total demand is expected to increase to 1,050 billion cubic metres by 2025. Demand for water in industrial sector is increasing by 8 per cent per annum and will reach to 191 billion cubic metres by 2025.
India is the largest exploiter of ground water in the world. It is withdrawing 251 cubic km of water every year, which is more than the US and China put together. Amongst major countries, ground water levels in India are going down faster than anywhere else.
Q. What is the size and scope of water treatment market in India?
A. The total percentage of water reuse is expected to increase from 1 per cent to 5 per cent by 2019. The total waste water discharge from industries will rise to about 83,000 million litres per day by 2025.
As much as 60 per cent industries surveyed feel that water scarcity is affecting their business, while 87 per cent industries feel that their business will be adversely affected due to water scarcity in the next 10 years. Regulatory pressures are likely to drive industries like textiles, leather tanneries, power plants and chemical industries to go for zero liquid discharge solutions. All power plants will likely to shift to sewage recycling to meet their water needs. Tamil Nadu and Gujarat are likely to become the biggest markets for water reuse. Maharashtra, Karnataka and Indo-Gangetic plains also likely to see major spurt in water reuse projects.
Sewage recycling is expected to grow significantly. Railways are likely to become major consumers of water reuse, which will save over 500 millions of liters per day (MLD) of water. Biological treatment technologies will become common and replace chemical technologies. Ultra filtration technology are also expected to grow significantly for tertiary recycling applications. The major consumption of recycled water would be for cooling towers, gardening and industrial process applications. Indirect potable reuse is expected to grow in India, as recycled water would be fed to surface and ground water sources.
Sea water desalination market will grow by 15 per cent, with about 30 projects in the range of 10 to 50 million litres per day expected to come up in the next four years. Recovery of chemicals and nutrients from industrial effluent will also grow. Energy recovery from sewage treatment plants will also become common.
Stricter guidelines for sludge management and disposal are likely to hit the industrial sector. The market for dewatering equipment would grow by 45 per cent over the next 3 years.
The water sector also holds an opportunity to be a major employment-creator in the economy. A number of international consulting and engineering firms have set up design centres in India. Pune, Delhi and Bangalore are emerging as hubs for back-end engineering and operations. The availability of good manpower in these locations is contributing to this growth. With sizeable water treatment, pumping and distribution infrastructure being created under JNNURM and other government schemes - there will be a need for good operation and maintenance manpower. We project that the water sector should generate about 1 million new jobs in the next 5 years.
Q. What are the biggest areas of concern for India's water ecosystem?
A. The reduced availability of fresh water and increasing ground water withdrawal is a matter of great concern. In parts of Gujarat, Rajasthan and Tamil Nadu, the annual per capita availability of water is less than 500 cubic metres, which is a critical level. The water reserves are depleting fast and no systemic efforts are being made to address the situation.
Water quality is also worsening rapidly. Fluoride, iron, arsenic, nitrate and salinity are afflicting ground water in various parts of the country. With ground water aquifers depleting, new geological structures are coming into play leading to mineral contamination. Increasing pollution from agriculture and industrial activity is also a matter of concern. Newer contaminants like pesticides, pharmaceutical byproducts and chemicals are coming to the fore.
Urban water supply and sanitation is another major challenge, as a major chunk of our population is moving to cities. With old and unattended distribution networks, unaccounted for water (UFW) in most Indian cities is 45 to 50 percent. Out of the total water treated and supplied from the plant, only about half reaches the metered users. Water security for natural and man-made disasters is low. In a recent international study of 50 major cities across the world, Delhi and Mumbai came at the bottom of the pack at 49th and 50th positions.
Q. What will be the size and scope of the water reuse market in India?
A. India is expected to be one of the top 5 markets for Water Reuse by 2019. Currently, there are around 800 water reuse plants in India. This number is projected to increase to 2,200 plants by 2019, worth a capex value of Rs 8,000 crore. The scope would include recycling of sewage from urban clusters for supplying to large industries/industrial estates. It would also include effluent recycling within industries like textiles, distilleries, pharmaceuticals and automotive.
The Namame Gange project and other initiatives for cleaning rivers, will also create opportunities for water reuse. As private partnership is being brought into these projects, the sustainability will improve with the creation of industrial and commercial markets for water reuse. Over 800 polluting industries along the banks of the Ganga river have been notified by the Pollution Control Board and have been mandated to install zero liquid discharge solutions.
Q. Which players will dominate the reuse market? International or national... And who will stand to have an edge and why?
A. The water reuse will continue to be a fragmented one. No single player - national or international - will ever dominate the sector. There is no technology edge or differentiation with any one player. Success will be determined by better project execution and financial strength, in case of public-private-partnerships. The larger municipal reuse market is dominated by players like Suez, Veolia, VA Tech Wabag, Toshiba, SPML and Enviro Control. The industrial market is likely to be dominated by players like Ion Exchange, Thermax, Praj Engineering, Rochem, Fontus Water and Wipro Water. A number of regional and local players continue to have a high combined share of the market.
The edge will be with companies that have more energy-efficient and differentiated solutions, and with a stronger Operations and Maintenance (O&M) capability. Business model innovation like BOO and performance-based billing is likely to come in. A lot of private equity and other investment are coming into the water sector. This might lead to some consolidation in the medium term. Growing at over 16 per cent per annum, the overall sector presents a good opportunity for investors.