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India- EU: Creating Market Alliances
Building Access for “Waste-Water Management” Companies
May, 2011
www.ebtc.eu

India - EU: Creating Market Alliances
Building Access for
“Waste-Water Management” Companies
Contents
1. Executive Summary 5
2. Project Introduction 7
3. Scope 8
4. Objective 9
5. Methodology 10
6. Insights gained through Primaries 11
7. Wastewater and Wastewater Management 12
7.1 Associated Goods and Services 14
7.2 Usage Patterns 15
7.3 Purchase Attributes 16
8. EU Economy: Wastewater Management 17
9. India Outlook 20
9.1 Wastewater Management in India 22
9.2 Current Market Scenario 24
9.3 Wastewater Management: Goods and Services 27
9.4 Policy Measures by GOI 28
9.5 Incentive Structure 30
9.6 Key Players 32
9.7 Indian Waste Management Trade Scenario 33
9.8 Operational Advantages 34
9.9 Best Practices 35
9.10 Trends & Drivers 36
9.11 Limitations 37
9.12 PESTLE 38
9.13 SWOT: The EU Company Perspective 41
9.14 TOWS: The Core Differentiation 43
10. Option Strategy 50
11. Open Trade Benefits 51
12. Recommendations for Government 54
13. APPENDIX 55
14. About EBTC 69

India-EU: Creating Market Alliances
Acknowledgement
This report is the output of a detailed study and analysis conducted
by KRD Vision, under the leadership of Mr Ketan Dewan, Founder and
Managing Director, so as to enable European Waste Water companies
create market alliances with Indian counterparts. We are thankful to
Ketan and his team to present the key insights and action points to
make this an informative and comprehensive report. This report is not
only beneficial for policy makers but also for companies involved within
the waste water value chain to enter the Indian market’.
www.krdvision.com
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Building Access for “Waste-Water Management” Companies
5
Executive Summary
India, with ~ 1.15B population and 7.3% GDP growth, has become
one of the world’s preferred investment destinations owing to its
vibrant domestic market, technological capabilities, and cost
advantage. India presents a host of opportunities to nations
looking to expand and increase profitability especially when
markets in regions such as Europe are stagnating and corporate
profits are plummeting.
India is also witnessing a shift in focus towards “Green
Technologies” in the wake of increased public awareness,
environmental pressures, and conscious government support. The
wastewater sector is also an area of focus due to diminishing
water resources and increasing population pressure. Water and
wastewater treatment market in India is currently worth ~€ 954M
and is expected to grow at ~13% in the next 3-4 years. Out of the
total wastewater generated ~65% of the wastewater generated
goes untreated, requiring imminent need for effective wastewater
management.
Our analysis exhibits that macro factors such as FTA, cost
sensitivity, and varied climatic and usage considerations directly
impact operations in India. The report critically examines key
strengths of EU companies, which offer distinctive advantage to
them over Indian counterparts. There exists immense
opportunities for EU companies owing to:
Commercially viable advanced technology
Environmentally conforming solutions
However, EU companies need to overcome concern such as:
Lack of Indian experience to meet tender requirements
Different waste treatment procedure
‣ In Europe treatment is done at source where as in India it is
done at the end
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India-EU: Creating Market Alliances
EU companies should utilise market opportunities such as fiscal
incentives offered by government and enormous gap in
wastewater generation and treatment that exists in the market.
The report evaluates key challenges faced by EU companies such
as:
Red Tapism
Lack of transparency
Fierce competition
Weak Implementation of IPR regulations
Diverse technical standards
Complex capital raising criteria
In order to overcome bureaucratic bottlenecks EU companies
need to:
Partner with a local company
Start the regulatory process early
They need to localise parts of value-chain to derive cost benefit
and thereby effectively compete with Indian and Chinese
companies. EU companies can focus on opportunities available in
Tertiary sector of Class A cities and Class B cities lacking
adequate treatment infrastructures.
To safeguard IP rights EU companies need to:
Scrutinise partner’s credibility
Sign an NDA before sharing technology
They should avoid importing best technology till legal safety is
protected. In order to successfully overcome climatic and usage
barriers companies need to indigenise products. It’s suggested to
have a balanced portfolio.
EU companies can successfully raise capital by utilising grants
available from:
Home country,
Unilateral bodies
Local Embassy / Trade promotion bodies
EU companies especially the SMEs can successfully overcome
market access barriers by incorporating the above mentioned
solutions in their India strategy.
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Building Access for “Waste-Water Management” Companies
7
Project Introduction
Factors contributing to
acute wastewater
management crisis in
India:
India’s population is
1.15B, growing at
1.4% annually
Industrialisation
growth rate in 2007-
08 was~ 8.5% as
compared to ~5% in
2000-01
Urban population
growing at a rate of
2.3% annually (2005-
2010)
Only ~35% of
wastewater treatment
needs are currently
satisfied in India
I
ndia is facing an acute Wastewater management crisis. The
impact of the crisis is rapidly rising, owing to underdimensioned
and aged wastewater infrastructure, climatic
changes and associated irregularity of seasons, fast growth in
population and urbanisation, rapid industrialisation, expanding
industrial waste generation and intensifying residential waste. The
above factors are increasing the unregulated and illegal discharge
of contaminated water. This presents an enormous threat to
human health and wellbeing, with both immediate and long term
consequences. Sustaining the integrity of some of our most
productive ecosystems and to avoid spread of water borne
diseases, it is imperative to meet the future demands for water by
revolutionising the wastewater management practices.
Without better infrastructure and management, Indian corporate
and households will continue to generate millions of litres of
wastewater, which will not be fully treated for reuse. To counter
this grave situation, India needs the assistance of latest
technologies and processes, manpower, financial resources and
technical know-how.
Only ~35% of the wastewater treatment needs are currently
satisfied in India, while the balance 65% is not satisfied at all.
There are many SMEs from Europe that intend to enter India.
These SMEs may offer immense value in the form of advanced
technology and project management expertise. However, they
need to work around some of the market access challenges that
exist. This report showcases the Indian wastewater management
sector, the associated steps for market entry for EU wastewater
management companies and how they can successfully operate
within India.
Yearly wastewater
generated in India, i.e.
~36K MLD can submerge
a state like Andhra
Pradesh
Wastewater treatment
needs include:
Health
Sanitation
Reuse Water
Resources
Top two challenges
faced by EU SMEs in
India:
Bureaucracy
Cost Sensitivity
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India-EU: Creating Market Alliances
Scope
The report “India- EU: Creating Market Alliances” intends to build
access for Wastewater management companies. The scope
includes identification, analysis and incubation of strategic
alternatives, which will facilitate seamless entry of EU Wastewater
SMEs in the Indian wastewater sector.
Recommendations are provided on market access challenges,
which EC should negotiate with the Indian government. The
suggested amendments may help resolve wastewater sector
related concerns and realise increased trade between India and
Europe.
The research has been conducted within the below mentioned
scope:
Brief Analysis of EU Wastewater sector
Brief evaluation of Macro parameters of the Indian economy
Detailed evaluation of Indian Wastewater sector
Critical assessment of problems faced by EU companies in
India (focusing on the SME sector)
Suggesting strategic solutions for top challenges faced
Evaluating benefits of open trade between India and Europe
Recommendations for Indo-Europe talks
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Building Access for “Waste-Water Management” Companies
9
Objective
The objective of the project “India EU: Creating Marketing
Alliances” is to highlight key challenges faced by EU wastewater
companies in India and suggest remedial solutions to successfully
overcome them.
The objective includes the following:
Evaluate Macro Environment to exhibit ways to enhance India
– EU synergies
‣ Consumer benefits
‣ Eliminating trade barriers
Showcase top problem – scenario based solutions
‣ Bureaucracy
‣ Cost sensitivity
‣ Market entry
‣ Feasibility of European machinery in India
‣ IPR / Technology issues
‣ Customs / Duties / Taxes
‣ Capital raising
Guide EU Cos. to:
‣ Select business locations in India
‣ Understand regional market access criteria’s, regulations,
standards, and administrative practices etc.
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India-EU: Creating Market Alliances
Methodology
Matching Scope India Outlook Choke Points Open-Trade Benefits
Kick Off Meeting
Project Objective
Macro, Micro
Analysis
‘Waste-Water-
Management’ Good
& Service Analysis
Primaries with
EBTC ‘Waste-
Water-
Management’ Cos:
France, UK,
Sweden (5)
Build Insights
Discussion Guide
(2)
Market Outlook
‣ Size, CAGR
‣ ‘Waste-Water-
Management’
Goods,
Services
‣ Policy
measures by
the Govt.
‣ India- EU Trade
& Investment
Relations
‣ Key Players
‣ Export,
Consumption
‣ Operational
Advantage
‣ Best Practices
‣ Trends &
Drivers
‣ Limitations
‣ PESTLE*
Analysis
Identification-
Resolution Matrix
Entry barriers
Bureaucracy
Cost sensitivity
Technology
feasibility
Customs & Duties
Primaries (50)
EU Cos entering
India
EU Cos that have
potential in India
Validate Insights by
Key Opinion
Leaders (KOLs)
‣ Primaries (20)
Options Strategy
‣ Top Problem -
Scenario based
solutions
India- EU Synergies
‣ Economic
−
−
Exports
Production
‣ Consumer
Benefits
−
−
−
Lower Price
Greater
Choice
Higher
Quality
Eliminating Trade
Barriers
‣ Tariff Barriers
‣ Non-Tariff
Barriers
‣ SWOT, TOWS
Project Execution
Map
Value
Proposition
Actionable
Guidelines
Win-Win
Proposition
Figure 1: Methodology of the Project
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Building Access for “Waste-Water Management” Companies
11
Insights gained through Primaries
Primary Interaction Percentage
Distribution
KOL's
25, 33%
75
Indian
20, 27%
European
30, 40%
Indian wastewater industry is expanding at a tremendous rate,
with demand surpassing supply
The Indian government has legislations and regulations in place
to facilitate growth in this sector
Bureaucracy in India is an area of prime concern, but the
scenario is steadily improving
The custom and excise duties are higher than the European
average, but the opportunities are also immense
Technology Transfer is the easiest bit as India has quality
engineers
European imports seem expensive in front of equipments
sourced locally or from China
In India, waste is treated at the end rather than at source, unlike
in Europe. This leads to varying composition of wastewater
throughout the geography
Unorganised industry offers stiff competition in standard
equipments, but niche technologies have negligible competition
with good margins
Corporate taxes are high in India, but less than rates prevalent
in UK and Germany
SME's should follow the following route - Knowledge Transfer,
Feasibility Study in India, and then enter into projects
EU companies only share the scale down version with Indian
counterparts, due to risks associated with IPR
First mover advantage still exists in some niche sectors and
geographical locations in India
EU cos. should voice their common concerns to the concerned
European body, which can further discuss it with the Indian
counterpart
ROI / IRR increases with project experience and can go up to
15-17% after completion of 2-3 projects
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India-EU: Creating Market Alliances
Wastewater and Wastewater Management
While Wastewater is a loathed reality but an invaluable resource if utilized optimally,
Wastewater Management is a vital mechanism to maintain environmental and public
health safety
High proportion of
industrial units in India
comply with
environmental norms on
wastewater levels,
however they do this by
mixing wastewater output
with freshwater
W
astewater is defined as water that is of no further
immediate value for what it was originally used or
produced due to its quality, quantity or time of
occurrence. Wastewater has dissolved or suspended
solids, discharged from homes, commercial establishments, farms,
and industries.
Wastewater can be divided in three broad categories based on
source of origination:
1. Residential: Organic, Inorganic and Sewage
2. Industrial: Organic, Inorganic, Sewage and Sludge
3. Urban: Residential, Industrial and / or run-off rain water
Across countries the residential and industrial wastewater gets
mixed before entering the natural water bodies. This mixture of
residential and industrial wastewater is addressed as urban
wastewater. The Industrial wastewater goes through regulated
filtration process, undertaken by industry, before merging with the
water bodies. However, these regulations may vary from country
to country.
Types of Wastewater
Residential
(Organic,
Inorganic and
Sewage)
Industrial
(Organic,
Inorganic,
Sewage and
Sludge)
Urban
(Residential,
Industrial and
/ or run-off
water)
Wastewater Management Benefits:
Ensures Equity
Promotes Health
Protects Environment
Figure1: Types of Wastewater
Wastewater Treatment Entails
Removal
Treatment
Reuse /
Disposal
Figure 2: Wastewater Treatment Plant Entails
Ehow, Business Directory
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Wastewater Management 1 entails all institutional, financial,
technical, legislative, participatory, and managerial aspects related
to the problems associated with wastewater. It involves monitoring
the amount of wastes, including faecal matter or chemicals, that
go into our water resources so as to keep quality at acceptable
levels. Management of wastewater involves 3 stages of managing
waste from household, commercial and industrial sewage and
other wastewater / waste materials in an environmentally sound
manner:
Removal: Segregation, Collection, Transportation
Treatment: Processing
Reuse / Disposal
Mostly, the solutions require the use of waste pipes, sewers,
drains, cesspools, septic tanks, etc.
While the management of non-hazardous waste in urban areas is
the responsibility of local government authorities, the management
of commercial and industrial waste is the responsibility of the
waste generator(s).
1 According to the Environmental Protection Agency
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India-EU: Creating Market Alliances
Associated Goods and Services
Wastewater Management Goods and Services facilitate in the
process of removal, treatment and reuse / disposal of water
related waste.
Wastewater Goods and Services
Wastewater Goods
Pumps - centrifugal, commercial
and residential water, and jet
pumps
Mixers
Aerators for wastewater and
water applications
Bioreactors
Filters
Wastewater Services
Carbon Media Services
Membrane Services
Retrofit / Rehab Services
Testing Services
Ion Exchange Resin Services
Mobile and Temporary Water
Treatment Services
Service Contracts
Mixer
Aerator
Designbuild, Assocham, WTO, Dmoz
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Usage Patterns
Wastewater is used to
Produce: Biodiesel,
Electricity, Purified
Water, and Biogas
Wastewater Management Goods and Services find application in
removal, treatment and reuse / disposal of household, commercial
and industrial sewage and other wastewater. The following
procedures are used:
Wastewater Treatment Procedure
Physical Unit
Operations
Chemical Unit
Operations
Biological Unit
Operations
Screening Precipitation Aerobic
Mixing
Adsorption Anaerobic
Flocculation Coagulation Anoxic
Sedimentati Flocculation Membrane
on
Bioreactor
Floatation
Filtration
Gas transfer
Figure 3: Procedures used for treating Wastewater
Wastewater Management Goods and Services are mainly used in
the following processes:
Produce biodiesel from fats, oils & grease in wastewater
Produce electricity & heat from co-generation
Generate electricity from biogas or sewage powered fuel cells
Produce purified water
Produce biogas from wastewater & sludge
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India-EU: Creating Market Alliances
Purchase Attributes
Before making any purchase decision industrial customers usually
consider the below mentioned parameters (in no specific order):
Dealers /
Manufacturers
Credibility
Legal History
Financial Position
Technical Capability
Professional Competence
Products / Services
Assessment
Price
Quality
Specifications
Availability
Product feedback
Figure 4: Attributes considered by industrial customers while
purchasing Wastewater Management Products and Services
Government usually follows the following mechanism before making
purchase decisions (in no specific order):
Solution Providers
Assessment
Minimum requirement criteria:
‣ Technical Specifications
Financial stability / Reputation /
Experience
Cost / Price
Figure 5: Attributes considered by government while purchasing
Wastewater Management Products and Services
Siemens, Escwa
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Building Access for “Waste-Water Management” Companies
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EU Economy: Wastewater Management
European Govt. led Wastewater Management initiatives assist to regulate and enhance quality
for adhering to Environmental Standards
Highlights of EU in
Wastewater Management:
Market Leader in
Technology
Decentralised
Wastewater Managem
ent
Standardized and
Simplified Procedures
Wastewater management in EU is generally considered the
reference model for many developing countries. The present
practices are a result of enormous social and economic
development during the past few decades. The key factors that
have defined the successful design and implementation of these
practices are due to:
(a) Ambitious goals for water and sanitation infrastructure
coverage; and
(b) Wide-spread public pressure for improved environmental
quality. The same is translated into setting of restrictive quality and
effluent standards by the EC.
In 2010, Global Water and Wastewater Market is estimated to
be € 300B as compared to € 227B in 2008. In order to comply with
the current wastewater directives EU requires a capital of € 170B
to € 230B.
40% of the respondents
feel that wastewater sector
in Europe will start
stagnating in the next 5-7
years
A sustained strategic effort by political set-up in EU region has
played a pivotal role to tackle waste for meeting environmental
laws and standards. Continued support lead to efficient planning
and execution of the waste management exercise across EU.
In March 2009, EC increased spending of € 105B through the
cohesion fund on ‘green’ projects, which are a part of its economic
stimulus to counteract the crisis. € 54B will go to aid EU member
states to comply with European environmental legislation, while
€ 28B will go to water and waste management programs.
Global Water and Waste Water Market,
2008 - 2010 (In € B)
300.0
260.9
226.8
2008 2009 2010
Psiru, WSSTP, Toronto, Europa, Waterworld, USA Gov
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18
India-EU: Creating Market Alliances
~60% of the respondents
feel that EU has extremely
well regulated and
transparent policies
governing Wastewater
sector
EU has been making huge strides in wastewater technology with
advanced technology products such as Hybrid Filtration Systems
and UV Disinfection Systems entering the market.
EU Legal Framework constitutes of stringent environmental
policies to advocate, monitor and guide Waste Management
sector. Standards are defined by EU legislation for urban
wastewater treatment, groundwater pollution levels and member
information requirements. Main legislations concerning
wastewater treatment are:
Council Directive 91 / 271 / EEC
Commission Decision 93 /481
Directive 80 / 68 / EEC
EU Environmental
Legislation driving
compliance amongst
member states
Wastewater Management sector in EU has been in constant focus
due to the immense importance and relevance of green
technologies. Various EU countries are making a conscious effort
to improve their wastewater management processes to ensure
optimum utilisation of waste resources and improve living
standards.
The CEE industrial water and wastewater treatment market is
entering a vibrant growth phase. Market growth is mainly
triggered by the need to comply with the EU directives related to
industrial wastewater treatment due to the entry of member states
into the EU as well as increased foreign direct investments in both
the new EU member states and the rest of the CEE countries. As
one of the most developed regions in Wastewater management,
EU has various established companies catering to B2B and B2C
markets such as Siemens, WTE Wassertechnik GmbH, Veolia
Water Systems, Sita, and Remondis.
Population connected to urban wastewater
treatment 2 , 2005- 2009 (% of total)
99 99 98.6 97 98.4
94.5
96.6
89.9
95.1
84
2005 2009
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Building Access for “Waste-Water Management” Companies
19
2 Top 5 EU Countries on the basis of connectivity to wastewater treatment
E: Estimated 2005 coverage percentage
Waterworld, Europa
In response to the current economic situation, market players are
preparing for intense competition by providing greater product
features and value added services to ensure high sales.
Manufacturers are increasingly focusing on introducing new
products catering to diverse end-user sectors in order to widen
their customer base. The entry barriers in the CEE region are
relatively high due to strongly established local and regional
suppliers. Customers have shown greater willingness to work with
well-recognised local participants rather than external suppliers, as
local suppliers better understand the localised needs of the
environment.
The consumer market can roughly be divided into three users of
water and water waste solutions; Industry, Public and Private
Water works. While the number of water works that are privately or
industrially operated is larger, the average size of municipally
operated water works is much larger. For this reason, there is a
wide range of buyers that demand various types and amounts of
equipment. Future demand will mainly consist of purification
equipment for new installations and for the replacement of old and
out-dated equipment. Largest end-users of water pollution control
equipment are the water / wastewater works companies. The other
major group of end-users of water pollution control equipment
includes the chemical, petrochemical, pharmaceutical, energy and
food processing industries.
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India-EU: Creating Market Alliances
India Outlook
Strong fundamentals and growth rate, propelling the country towards economic prosperity
India is one of the fastest growing economies in the world and is
one of the few countries that have been relatively less impacted by
the global financial meltdown.
India has been achieving around 7.3% GDP growth rate over the
last 4 years and is witnessing an upsurge in economic prosperity.
The growth is driven by robust performance of the manufacturing
sector on the back of government and consumer spending. The
main sectors driving the economy are IT, Infrastructure, and
Pharmaceutical.
India has become one of the most sought after investment
hubs for the world economies. With a robust growth in core
sectors, Business Confidence Index is up 1.5 points, standing at
67.6. The GDP growth is expected to be ~8.2% in 2011.
India's Economic Projection: GDP and CPI, 2007-2010
9.4%
9.3%
6.4%
7.3%
5.4%
5.5%
7.2%
4.9%
2007 2008 2009 2010
GDP Growth
CPI
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Building Access for “Waste-Water Management” Companies
21
India’s Economic Outlook Projection
The west has been closely monitoring India’s success story. There
are large numbers of EU-India partnerships, which are getting
materialised. The FDI and FII inflows have been continuously
increasing, which further validates the confidence in India. The
total foreign investments attracted in 2009-10 amount to € 47.1B
as compared to € 15.1B during 2008-09, exhibiting a growth of
213%. The foreign exchange reserves have also increased from
€ 178B to € 198B in April 2010 during the previous year. As per
economic projections, India is believed to overtake China to
become the world's fastest growing economy by 2018.
Advantage - India
Growing Economy
Liberalised Reforms in Foreign Investments
Vibrant Domestic Market
Technological Competence
Cost Efficiency
Skilled Manpower Base
Well Established Financial Systems
Strong Judiciary
India GDP Composition, 2009-2010
(In € B)
Agriculture12
9,15%
Service,
507, 57%
€ 886.1B
Industry,
250, 28%
Economic Times, Business Standard, OIFC, Thaindian, Economics, Economy Watch, Indian Business, Indian
Business, Indian Business1 , ADB, Iornet, Europa
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India-EU: Creating Market Alliances
Wastewater Management in India
GOI led Wastewater Management initiatives and increased private participation fuelling
sustained growth
100% of the respondents
feel that wastewater
sector in India should
double in the next 4-5
years
93% of European
respondents intend to
enter Indian wastewater
sector in the next 2-3
years
Government related
projects contribute over
50% of revenues in this
market, while the private
sector contributes the
rest. However, the private
market is highly
fragmented and
unorganised.
33% of respondents feel
that procurement practices
in India favour domestic
companies over overseas
companies
While India is relatively rich in water resources, untreated
domestic sewage, industrial effluents and runoffs from chemical
intensive agricultural farms are the main contributors to
widespread pollution of surface and groundwater sources.
Wastewater Management in India has become an extremely
important area of focus due to increasing health awareness and
population pressure. The water and wastewater treatment
Industry in India is well diversified and has made rapid strides in
technological capabilities both on its own and through strategic
partnerships with overseas firms. Wastewater sector has been
witnessing major growth in the last decade due to increasing
government support and private participation. India's wastewater
market is expected to grow at a rate of 15-20%. Techniques
such as watershed management, rainwater harvesting,
desalination, filtration, river-interlinking, effluent treatment and
sewage treatment are finding huge importance in major cities,
which are the major contributors to water pollution in India.
Global Water companies have established a presence in India
across 20 cities, with some 70 projects started or underway,
worth several billion dollars. Large global and Indian players have
operations in India that include: Veolia Water, Suez de
Lyonnaise (Degremont) and VA Tech Wabag, Nalco and GE
Betz-Dearborn.
Indian Wastewater Industry Market Size
2007 - 2009 4 ( In € M)
6% CAGR
511.6 495.5
448
423.7
6% CAGR
575.3
489
E: Estimated
3 Source: www.export.gov; calculated on average
exchange rate of 2009
4 Converted using exchange rate of 31.05.2010
2007 2008 2009E
Total
Domestic
India PR Line, Export, Projects Monitor
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Building Access for “Waste-Water Management” Companies
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Multilateral and bilateral agencies provide major funding for
infrastructure projects in India. The World Bank currently operates
four projects in water supply and two in sanitation and sewage
improvement, worth € 571M 4 . The World Bank’s total commitment
to India’s water sector amounts to more than € 1.1B 4 .
The Indian Wastewater sector has large number of companies
across the value chain, from Technology Providers, EPC
Companies, Consultants to other solution providers. The graphical
snapshot highlighting the value chain across the Indian
Wastewater Sector has been exhibited in Figure 6.
Companies that offer
Wastewater Technology
Engineering,
Procurement,
Construction companies
such as Ion Exchange,
Hindustan Dorr-Oliver
Identification of
customer’s unmet need to
deleiver customised
solutions. Offered by cos
that include Janaksons
and Aqua Design. Cos.
need to approach
wastewater consultants
for requirements. SMEs
need to be on approved
list of consultants
Access to supply of clean
water for operational
process by cos. such as
Cadbury and Technocraft
Technology
Providers
EPC*
Companies
Consultants
Other Solution
Providers
End
Users
Support EPC and
Consultants by providing
ancillary products and
services. Ensto offers
these services
Figure 6: Value chain across Indian Wastewater Industry highlighting transfer of value proposition across sectors
* Engineering, Procurement, Construction
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24
India-EU: Creating Market Alliances
Current Market Scenario
Huge Demand Supply
gap: Almost 75% of Urban
Wastewater goes
untreated compared to
around 40% from
Industries
Wastewater treatment
equipments manufactured
by local cos. are 30%
cheaper than imported EU
machines
Today, India's drinking water investments constitute about 3% of
the national budget. 85% of the urban and 75% of the rural
population has access to public water supplies, and 48% of the
urban and 36% of the rural population to sanitation services. In a
developing urban society, the wastewater generation is usually
~30-70 m 3 per person per year. The growth segments in
industrial sector include power generation, steel manufacturing,
food and beverages, chemicals, and pharmaceuticals. In the
municipal sector, the growth is expected to come from investments
in municipal wastewater treatment.
BOD Generation in Wastewater Management
(t/d)
9,478
4,580
Industrial
Domestic
Wastewater Generated
(in MLD)
22,900
13,468
Industrial
Domestic
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In India, it is estimated that 22,900 MLD of domestic wastewater is
generated from urban centres while 13,500 MLD of industrial
wastewater is generated. The treatment capacity available for
domestic wastewater is only for 5,900 MLD, against 8,000 MLD of
industrial wastewater. Thus, there is a huge gap in treatment of
domestic wastewater.
Indian water treatment equipment industry is reasonably well
established and cost-competitive. Locally fabricated equipment
is about 30% cheaper than imported equivalents, but Indian firms
have limited capabilities in designing technologies for larger scale
water treatment plants. The water treatment market is evolving
from chemical treatment and demineralisation technologies to
greater use of membrane technology; thereby enhancing the
quality of water available for re-use.
BOD Discharge in
Wastewater Management (t/d)
3,510
1,776
Quality Standards define
levels of:
Coliforms Organism, pH,
Dissolved Oxygen,
Biochemical Oxygen,
Free Ammonia and
Boron
Industrial
Domestic
Water Quality plays an important role in determining the type of
technology / equipment, which will be used to treat and recycle
wastewater.
Projects Monitor, Projects Monitor1, CPC, Trade
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26
India-EU: Creating Market Alliances
The below mentioned chart highlights the Water Quality
Standards as laid out by the Regulatory Authorities in India:
Indian Water Quality Standards
Designated-Best-Use Class of water Criteria
Drinking Water Source
without conventional
treatment but after
disinfection
A
• Total Coliforms Organism MPN/100ml
shall be 50 or less
• pH between 6.5 and 8.5
• Dissolved Oxygen 6mg/l or more
• Biochemical Oxygen Demand 5 days
20°C 2mg/l or less
Outdoor bathing (Organised) B • Total Coliforms Organism MPN/100ml
shall be 500 or less pH between 6.5 and
8.5 Dissolved Oxygen 5mg/l or more
• Biochemical Oxygen Demand 5 days
20°C 3mg/l or less
Drinking water source after
conventional treatment and
disinfection
Propagation of Wild life and
Fisheries
C
D
• Total Coliforms Organism MPN/100ml
shall be 5000 or less pH between 6 to 9
Dissolved Oxygen 4mg/l or more
• Biochemical Oxygen Demand 5 days
20°C 3mg/l or less
• pH between 6.5 to 8.5 Dissolved Oxygen
4mg/l or more
• Free Ammonia (as N) 1.2 mg/l or less
Irrigation, Industrial Cooling,
Controlled Waste disposal
E • pH between 6.0 to 8.5
• Electrical Conductivity at 25°C micro
mhos/cm Max.2250
• Sodium absorption Ratio Max. 26
• Boron Max. 2mg/l
Below-E
• Not Meeting A, B, C, D & E Criteria
CPCB
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Wastewater Management:
Goods and Services
Various treatment techniques are designed to remove pollutants
from wastewater. The objective of wastewater treatment is to
separate wastes from water. There are Physical, Chemical and
Biological separation processes. Sedimentation and Screening are
examples of Physical processes. Coagulation, Ion Exchange and pH
adjustment are typical Chemical processes, while various forms of
Biological digestion belong to the category of Biological processes.
Bar Screens
Indian Wastewater Goods and Services
Skimmers
Wastewater Goods
Bar Screens
Aerators
Air Diffusers
Bio-Filters
Bio-Reactor’s
Pumps
Skimmers
De-Ionizers
RO Systems
Purifiers
Wastewater Services
Retrofit & Revamp
Plant Management
Testing Services
Erection & Commissioning
Upgrading & Modernization of
Plant
Operator Training
Consumables Replacement
and Supply
Do EU Wastewater Companies percieve
Technology Transfer to be a challenge?
Aerators
Can't say
6, 12%
Yes
7, 14%
50
SSVS
No
37, 74%
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India-EU: Creating Market Alliances
Policy Measures by GOI
Policy Measures by Govt.: Proactive Environmental policies and Legislation offer framework for
sustained growth and development
Government is
consciously adopting
environmentally viable mix
that conforms to
international standards
~30% of the respondents
feel that Indian
government is taking
necessary initiatives to
promote Wastewater
technology in India
Wastewater Sector
receiving stimulus
through:
Awareness built by
NGO’s
Stricter Environmental
Regulations
Allocation for
wastewater related
activities in 11th Five
Year Plan
Government has been consciously focusing on Clean
Technologies and has implemented various policy measures to
promote this sector. Energy and Environment scenario in the
country is likely to witness an exponential shift. Various initiatives
are underway to shift to usage of non-conventional / renewable
energy. This will assist in conforming to international standards
on climatic norms on curbing emissions and sustaining a cleaner
environment.
The Ministry of Water Resources is responsible for laying down
policy guidelines and programs for the development and regulation
of water resources.
The market has received the necessary stimulus backed on
awareness and impact built by NGOs, stricter Environmental
Regulations, 11th Five Year Plan’s allocation towards urban
sewerage, water and sanitation facilities, and the compulsions to
treat, recycle, and reuse the industrial effluent back into the
process operations.
Over the last three decades India has developed an elaborate
Environmental Policy Framework and Enforcement infrastructure.
The key pieces of legislation driving India’s wastewater
treatment markets are as follows:
The Water (Prevention and Control of Pollution) Act, 1974:
The Water (Prevention and Control of Pollution) Act was enacted
in 1974 to provide for the prevention and control of water pollution,
and for maintaining or restoring the wholesomeness of water in the
country. The Act was amended in 1988 to conform closely to the
provisions of the EPA, 1986. It set up the CPCB (Central Pollution
Control Board), which lays down standards for the prevention and
control of water pollution. As per the act, standards for effluent
treatment plant are based on End of pipe treatment. At the State
level, the SPCBs (State Pollution Control Board) function under
the direction of the CPCB and the state government.
The Water (Prevention and Control of Pollution) Cess Act,
1977: The Water (Prevention and Control of Pollution) Cess
Act was enacted in 1977, to provide for the levy and collection of a
cess on water consumed by persons operating and carrying on
certain types of industrial activities. This cess is collected with a
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view to augment the resources of the Central Board and the State
Boards for the
prevention and control of water pollution constituted under the
Water (Prevention and Control of Pollution) Act, 1974. The Act
was last amended in 2003.
The Water (Prevention and Control of Pollution) Cess Rules,
1978
A Rule to specify standards of meters to be affixed, specify returns
to be furnished, the manner in which and the time within which the
cess collected shall be paid to Central Government, specify the
powers to be exercised by officer or authority, specify authority
which may impose penalty, specify authority to which an appeal
may be filed or any other matter which has to be or may be
prescribed in the Water (prevention and Control of Pollution) Cess
Act, 1977.
The Water (Prevention and Control of Pollution) (Procedure
for Transaction of Business) Rules, 1975
In exercise of the powers conferred by section 63 of the Water
(Prevention and Control of Pollution) Act, 1974 (6 of 1974), the
Central Government enacted this after consultation with the
Central Board for the Prevention and Control of water Pollution.
Environment (Protection) Act, 1986: The Environment
(Protection) Act authorises the central Government to protect and
improve environmental quality, control and reduce pollution from
all sources, and prohibit or restrict the setting and / or operation of
any industrial facility on environmental grounds.
Slight Amendments to the original law, The Water (Prevention and Control of Pollution) Act, 1974 are:
The Water (Prevention and Control of Pollution) Second Amendment Rules, 1976
The Water (Prevention and Control of Pollution) Amended Rules, 1989
CPCB
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India-EU: Creating Market Alliances
Incentive Structure
Incentive Structure: Government incentivizing private participations through various programs
and exemptions
Incentives Offered to
Waste Management
Companies:
Fiscal
‣ 10 Year Tax Holiday
‣ 100% FDI Waiver
Government
Initiatives
‣ Setting up Energy
Fund
‣ Institutionalising
sector specific
JNNURM Program
~42% of the respondents
expect the government to
offer no special incentives
for EU companies, only a
level playing field
In order to encourage private participation in waste
management sector the government offers an array of
incentives. The overall budget of government agencies operating
in waste management sector has increased, which enables them
to transfer the benefits to the private operators.
Major incentives that have been introduced in wastewater
management space have been highlighted as follows:
Fiscal Incentives:
1. Tax Holiday: A 10 year, 100% deduction of profits and gains is
available for companies operating in water supply projects,
water treatment systems, and sanitation and sewage projects.
2. FDI Opportunity: 100% FDI is permissible under automatic
route in construction and maintenance of Rural Drinking Water
Supply Projects, Package Water Treatment Plants, Rain and
Rain Water Harvesting Structures, Waste-Water Recycling.
3. Loans Availability: Soft loans are provided through:
IREDA, a public sector company of the Ministry
Nationalised banks and other financial institutions for
identified technologies / systems
4. Tax / Duties Relief:
Direct taxes: 100% depreciation within 1 st
installation
year of project
Exemption / reduction in excise duty
Do EU Wastewater companies expect
government to offer special incentives?
Is raising capital in India percieved to be
challenging for EU Wastewater SMEs ?
Can't say
10, 20%
50
Yes
19, 38%
Can't say
22, 44%
50
Yes
5, 10%
Not
Required
21, 42%
No
23, 46%
NRI, OECD, TOI, Business Standard, Equity Bulls
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Exemption from Central Sales Tax, and customs duty
concessions on the import of material, components and
equipment used in “Renewable Energy” RE projects
Duty-free import of renewable energy equipment
Exemptions from electricity taxes
5. Subsidies: CETPs, TSDF, and conveyance pipelines for
treated wastewater disposal into deep sea are eligible for a
25% state subsidy. Capital subsidies and concessionary
financing from the Indian Renewable Energy Development
Agency are available.
Government Initiatives:
Setting-up an Energy Fund: In the Union Budget 2010-11,
the government announced the setting up of the NCEF for all
funding research and innovative projects within clean
technologies.
Initiating Waste Management Programs: Government has
set up JNNURM program to fund cities for developing urban
infrastructure and services. In recent past, funds allocated for
JNNURM increased by 87% for 2009-10 to € 2B, which is
attracting global players to enter the Indian market. As of May
2009, government had sanctioned 463 projects requiring an
investment of ~€ 7.5B, mainly for basic urban services like
water supply, sewerage and storm-water drainage.
Budget Expansion: Plan outlay for the Ministry of New and
Renewable Energy has increased by 61%, from € 99M in 2009-
10 to € 160M in 2010-11
Encouraging Public-Private Partnerships: Through
economic incentives, both the central and state governments
are promoting PPPs for the development of infrastructure for
environmental services
Other Incentives
Scrap / waste / remnants / unutilised materials / surplus or
obsolete capital goods may be exported or sold in the DTA on
payment of duties
Liberalised foreign investment approval regime is enabled to
facilitate foreign investment and transfer of technology through
joint ventures
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India-EU: Creating Market Alliances
Key Players
Key Players: Highly Competitive Domestic and overseas companies dominating Wastewater
sector in India
Healthy mix of Indian,
EU, and North American
companies operating in
Wastewater sector in
India
The wastewater management sector in India is highly
competitive, with a healthy mix of Indian and Overseas firms.
Following are the major players in this sector:
Ramky Enviro Engineers Ltd.
GE Power & Water
Gammon India Ltd.
Wock-Oiver Ltd.
Nayagara Water Solutions Pvt. Ltd.
Thermax Ltd.
Va Tech Wabagh
Ion Exchange Services (India) Ltd
Driplex Water Engineering
Indocan Engineering Systems Ltd.
Veolia Water India
Europa, Business Standard
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Indian Waste Management Trade Scenario
Indian Wastewater Sector is a Technology Driven market; it has become an increasingly
important destination for Advanced Technology from North America and Europe
Current estimated
market for Water and
Wastewater treatment, €
954M, growing at a
CAGR of 13%.
Per Capita domestic
consumption of 89 lpd is
expected to touch 167 lpd
by 2050.
Wastewater sector is becoming increasingly important for India’s
growth and prosperity. The market in India for water and
wastewater treatment is currently worth ~€ 954M and is
anticipated to grow at a CAGR of ~13% between 2010 and 2013.
U.S. is India’s principal source of imports of water treatment
equipment, with an estimated 40% market share.
The current water consumption in India is 1,900B lpd. The per
capita domestic consumption is 89 lpd. By year 2050 water
consumption is expected to grow at a CAGR of 0.5% and is
estimated at 2,463B lpd. Also, the per capita domestic
consumption is estimated to be 167 lpd.
~80% of the respondents
feel that wastewater sector
will be a hot-topic of
discussion in the coming
India-EU FTA
Indian Wastewater Treatment Market Imports,
2007- 2009 (In € M)
82
13% CAGR
88
104
2007 2008 2009E
*Estimated
Source: www.export.gov
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India-EU: Creating Market Alliances
Operational Advantages
Low Cost along with Ever-Growing Consumer Base gives India a Distinctive Operational
Advantage
India’s Operational
Advantage:
Economies of Scale
Low Cost Benefit
PPP Business Model
Subsidies through
SEZs
35% of the respondents
expect an ROI / IRR of 15-
18% by the end of 2-3
years in India
In the last decade, India has become an important business
destination for various overseas companies. In the recent past
various EU Wastewater companies have entered India to benefit
from the immense Operational Advantages on offer.
Following are the Major Advantages that India offers:
Economies of Scale: India offers an immense target base for
various EU companies in waste management sector. The
country’s increasing population and urbanisation keeps the
target market growing, an opportunity that overseas companies
can tap and thereby increase their sales volume and benefit
by achieving Economies of Scale
Low Cost Benefit: The overall cost of doing business in India
is much lower, ~30-50% lower, than conducting business in
Europe, due to cheap labour and other input costs. EU
companies will reduce their overall cost of operations with an
India presence.
Public Private Partnership Business Model: The
government has been promoting the PPP model in waste
management sector. EU companies can conduct business
through the PPP channel and benefit from reduced cost and
availability of low cost capital. This would significantly reduce
their operational cost and ease business operations.
Subsidies through Special Economic Zones (SEZs):
Government offers tax breaks to companies (domestic and
foreign) for setting up units in SEZ. Some of these subsidies
include tax rebates, fiscal incentives, and lands at
subsidised rates. EU companies can follow this investment
route and avail various attractive schemes.
Reference: Dr. D.D. Basu, Sr. Scientist, CPCB
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Best Practices
Indian Wastewater Market continues to benefit from highly Innovative Indigenized Best
Practices
Indian Best Practices:
Recycling
Wastewater for
Aquaculture
Forestation on
Wastewater Area
Development of
Wastewater
Recycling and Reuse
Recovery of metals
from Industrial
Wastewater
Recovery of solvents
from wastewater
Indian urban water supply and wastewater management are in
transition from unsustainable centralised model to a sustainable
and rational decentralised one. Development of National level
public awareness is getting generated through effective
campaigns, including public meetings and student rallies. Also,
citizens have been motivated to store and manage waste locally.
India’s Waste Sector has developed various indigenous methods
in the last few decades, which have made it extremely productive
and efficient.
Prominent Best Practices prevalent in this sector are as follows:
Recycling of Wastewater: Wastewater has been recycled
including Sewage effluent for Aquaculture
Water Management at a Household and Residential
layout-level: This was followed in Bangalore and involved
roofing and plumbing practices, water efficiency and fixtures,
rainwater harvesting, recharge wells and sumps, groundwater
use and wastewater treatment, solid waste management,
landscaping and behavioral changes
Forestation on Wastewater Area: A village in Maharashtra
used the route of planting trees to overcome the problem
posed by open gutters.
Development of Wastewater Lake into Recreational Area:
In Orissa an amusement park was set up on an area that was
previously flooded by wastewater. An Indo-Canadian Agency
funded this project.
Designing Flexible Wastewater Systems: These systems
allow efficient and seamless usage of utilities during peak
tourist loadings as well as “off-season”. Such initiates have
been taken in various Indian cities.
USAID
Municipal Wastewater Recycling and Reuse: USAID offered
technical assistance to the NMC and Mahagenco to design,
develop, and implement highly innovative wastewater recycling
and reuse project in Nagpur. The project was designed to
develop large scale industrial applications for treated municipal
wastewater. It allowed NMC to meet environmental compliance
to treat municipal sewerage and Mahagenco to purchase the
treated water for its power plant operations.
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India-EU: Creating Market Alliances
Trends & Drivers
PPP Models and Favourable Regulations paving the way for Vision 2020 for Wastewater Sector
in India
Key Trends:
Focus of Govt. and
Private Sector
Favorable Economic
and Regulatory Policies
Growing health
conscious population
Need for customisation
Accelerated growth in
Commercial and SME
Sector
Industry moving
towards 100% Reuse
and Recycle
European MNC’s
driving market towards
environmental
compliance
Water requirements of
major water-consuming
industries has grown by
40 times
Agricultural sector uses
85% of the available
fresh water
The Indian wastewater sector has gradually changed in the last
decade. The sector in recent past has seen higher focus from
government agencies and the private sector. Growing population
demands coupled with increasing health consciousness have
fuelled the growth in the Indian wastewater sector.
Water and wastewater treatment, especially in the industrial and
municipal sectors, is becoming big business. The point-ofconsumption
market that involves localised treatment of water by
setting up distribution channels is ~€ 166M. Industries in the
country require normal to ultra-purified market (as with
pharmaceutical companies) and this segment has business to the
tune of € 332M, growing at 15% annually.
The real growth for the sector will come from the municipal water
and wastewater treatment business, mainly dependent on
government allocations and funds from agencies such as Asian
Development Bank, World Bank, JNNURM and JBIC.
Customisation is just one of the many options available that can
be selected in view of pressing factors such as a general space
crunch that bothers many industrial and commercial SMEs, while
setting up an effluent plant. The accelerated growth seen in
commercial sector (hotels, hospitals, institutions, shopping malls)
and small and medium scale industries (food and beverages,
sugar, chemicals, pharmaceuticals) has imparted thrust into this
market.
Due to the pattern of industrial development and the undeniable
achievement of the commercial sector, state governments are
drafting specific economic and regulatory policies to attract
industrial and Information Technology investments.
The highlights of the wastewater management sector in India are
as follows:
Fragmented Market: More than 500 companies, of which
around 20 are large and the rest are small
Unorganised Market: Major part of wastewater treatment and
services market in rural India is unorganised, not regulated and
there is little involvement of municipal bodies to enforce law
Suite of Solutions: Apart from the supply of the equipments,
companies are also profiting themselves by providing
consulting and design services to the Indian water industry
Initiatives: Major Initiates are taking-off by GOI / Pvt. Sector,
also more and more ULBs are approaching capital markets
Reference: Dr. D. D. Basu, Sr. Scientist, CPCB
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Limitations
Institutional Weaknesses in Planning and Execution of Wastewater Management Projects
continue to be an Area of Concern
Indian Wastewater Segment is experiencing a steady growth rate.
However, lack of knowledge of best practices amongst various
municipalities regarding generation, collection and disposal of
wastewater leads to continuation of poor practices.
Structuring and implementation of PPP in urban sewerage and
sanitation continues to be a challenge. This is mainly due to lack
of enabling legal and regulatory environment at the state / city
level, apprehensions about managing PPP related contracts,
capacity and knowledge gaps among institutions and key
stakeholders.
Following are the Reasons for Improper Management of Waste:
Improper Planning for waste management while setting up
Townships
Unclear Institutional Set-Up for waste management, planning
and designing in urban local bodies
Untrained Manpower is a prime concern across all industrial
regions of India. Also, execution of service contract is a
complex assignment, even for large companies.
Lack of Community Involvement due to low awareness
levels of waste management among people
Concerns within
Wastewater Management
in India:
Improper Planning
Unclear Institutional Set-
Up
Untrained Manpower
Lack of Community
Involvement
Low Expertise and
Exposure
Shortfall of Funds with
ULBs
Low Price
Absence of Segregation
of Waste at Source
Low Expertise and Exposure to city waste management
using modern techniques / best practices
Shortfall of Funds with ULBs and indifferent attitude of ULBs
to levy user charges and sustainability
Low Price as unorganised segment dominates the AMC
market; services are offered at low rates by providing cheap
labour, low-grade chemicals and spares
Absence of Segregation of Waste at Source, which
highlights that largely, End-of-Pipe treatment is prevalent in
India, unlike Europe, where treatment at source is also
emphasised. This leads to varying composition of wastewater
throughout the geography
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India-EU: Creating Market Alliances
PESTLE
Robust Economic Growth and Government Initiatives propel growth of Wastewater sector but
Cost Sensitivity and Varied Technological considerations continue to remain a Challenge
The Macro landscape in India indicates that government is
consciously promoting the growth of wastewater sector.
Necessary funds are made available through lending bodies and
bureaucratic bottlenecks are getting resolved. EU’s sophisticated
technology has high demand in India; however it needs to be
customised as per local requirements due to cost sensitivity and
climatic considerations.
The same factors have been highlighted in the model below.
PESTLE: Indian Wastewater Sector
MACRO
FACTORS
Factors Affecting EU Wastewater
Companies in India
Implications of Factors for EU
Wastewater Companies in India
Relative Importance of Factors
for EU Wastewater Companies
Time(N,F,N / F)
POLITICAL
Type(-,+)
Dynamics (=,>, VI
Reason: India - EU FTA talks are extremely important to address disputes related to entry barriers and IPR
regulations. EU wastewater companies are economically and operationally impacted by this.
Government led funding
GOI has significantly increased
funding for JNNURM and other waste
management initiatives
Increased funding will ease availability of
capital thereby benefitting EU companies
N
/F
+ > I
Reason: Funding needs depend on solutions offered by various companies. Wastewater product manufacturers
are mainly impacted by this.
Money Control
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High Growth Sector
Indian Wastewater sector growing at a
CAGR of 15-20%, is one of the fastest
growing in the economy
EU companies can tap into this high
growth sector and increase their overall
revenue
N + > VI
Reason: Primarily, slowing / stagnating growth of EU companies in local markets and huge potential in India; is a
driver for prospective wastewater companies
KOL’s Perception
ECONOMIC
Low cost machines have high demand
in India
Maximum municipal tenders are
approved at low cost
Sophisticated EU machinery is more
expensive than the Indian version, this can
be a problem area
Technological specifications can pose a
challenge in getting projects
N - > VI
Reason: EU companies will not get value for their sophisticated technology. This can have a bearing on getting
projects.
High Tariff
India has a high tariff regime, although
it has been reducing gradually
High Import Tariffs remain a concern and
can discourage foreign investments
N - < I
Reason: Indian tariff rates are higher than the EU average. Thus it would be a comparatively expensive proposition
for technology importers.
Trade Association
SOCIAL
Wastewater sector does not have a
strong single trade association
Reduced bargaining power and
promotional support to wastewater
companies
N - > I
Reason: Wastewater companies would not have a body that could promote their interest in the short term,
although this has a limited impact on operations
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India-EU: Creating Market Alliances
Multiple Technologies
India with diverse geographical regions,
varied climatic conditions and levels of
urbanisation requires a suite of
technological solutions
EU companies need to customise their
technology
Offer multiple technologies for Indian
operations
N
/F
- =
V
I
Reason: EU companies need to customise their offerings in order to operate successfully. However, this may
sometimes be a tedious process and impacts nearly all solution providers.
Rising Demand of Sophisticated Machinery
TECHNOLOGICAL
Demand for advanced waste
management technologies such as Ultra
Filtration and Membrane Bioreactor is
rising especially in highly polluted and
urban regions. Sector may grow by
~18% each year
Market gradually shifting from chemical
treatment / DM plants to membrane
technology
Good opportunity for EU companies to
cater to new regulatory requirements and
growing environmental responsibilities
F + > I
Reason: Increase in demand for sophisticated machinery has direct impact on the applicability of EU technology in
India. Sale of EU products may increase significantly
Strict Regulatory Policies
LEGAL
Strict environmental regulatory policies
for wastewater management
Adherence to various national and
regional rules
EU companies may benefit because of their
highly environmentally conforming solutions
N
/
F
+ > I
Reason: EU companies have a major advantage vis-a-vis their Indian counterparts owning to their commitment to
meet stringent environmental norms
Varied Climate
ENVIRONMENT
Varied and extreme climatic conditions
due to India’s vast geographical
expanse will impact Wastewater
industry
Technology applicable at one location
may not be applicable across another
location
EU companies need to offer a portfolio of
offerings depending upon regional /
climatic consideration
N/
F
- = VI
Reason: Europe has different environmental conditions as compared to India. EU companies need to alter their
specifications based on local needs.
Ramky
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SWOT: The EU Company Perspective
Superior Technology and Commercial Viability, a forte of EU cos., although high cost of
Machinery an obstacle
EU Wastewater companies possess immense technological
capability that has a ready market in India. Their technology
adheres to stringent quality and environmental norms and will
assist to equip India to raise its quality standards and compete
globally. However, they need to customise their offerings as per
varied climatic and usage considerations in order to successfully
operate in India.
Core Sustainable:
Strength
Weakness
Critical:
Wastewater treatment in India is
fundamentally different when compared to
EU;
‣ In Europe treatment is done at source
where as in India it is done at the end;
hence compatibility of technology to
Indian settings may undergo a change
Core:
Advanced technology that is commercially
viable considering the scale India would offer
Environmentally conforming solutions in EU
would help India build robust regulation and
norms to enable economically and
environmentally sustainable solutions
‣ Also this would assist EU companies build
a strong relationship with government
departments and regulators
Core:
Lack of experience in India usually leads to
disqualification based on municipal tenders
requirements and inability of EU companies
to choose alternate routes to get the work
done
Basic:
Conformation to stringent international quality
standards
Basic:
Suite of solutions required to cater to varied
climatic and usage requirements
Technological expertise with strong R&D
capability
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India-EU: Creating Market Alliances
Opportunity
Long Term:
Trend building to move towards 100% reuse
and recycle; however the scale is currently
limited and is expected to grow in the next
2-3 years
Agricultural sector consumes ~85%
freshwater; however availability of the same
a key challenge owning to rapid
industrialisation and urbanisation
‣ Thus government promoting need for
water treatment at rural sites
Demand for sophisticated technology is
increasing @ 17% yoy
Medium Term:
~62% of untreated wastewater presents
immense opportunities
Financial assistance available from trade
promotion bodies and local embassy
Threat
High:
Highly bureaucratic and slow procedures
with multiple levels hamper speed of market
entry and business operations
Cost driven tender mechanism, discourages
expensive EU technology
‣ Projects approved at lowest bidder level
Indian and Chinese solutions are popular as
overall costs are less as compared to EU
average
‣ Cost of production in China is extremely
low
Medium:
Weak IPR implementation resulting in
corporate malpractices
Inadequate wastewater treatment
infrastructure creates functional bottlenecks
Short Term:
Incentives offered by government e.g. Tax
Holidays, FDI, other subsidies
Low
Fragile legal and regulatory environment
hampers operations
High tariffs and corporate taxes (32%) put
pressure on operating margins of companies
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TOWS: The Core Differentiation
Indian landscape exhibits opportunities for EU companies to
leverage on their superior technology and experience by optimally
utilising available financial resources. However, it’s important for
EU companies to be cognizant of operating with low cost scalable
models, which can be best built by associating with local partners.
Strength (Internal Factors)
Opportunity
(External Factors)
Leverage on superior technology and experience to cater to
Indian wastewater sector. Utilise financial assistance to reduce
initial expenditure and increase viability
‣ Employ advanced technology in the largely untapped tertiary
sector (reuse / recycle)
‣ Access financial assistance from respective embassy and
trade promotion bodies
‣ Run marketing campaigns and participate in seminars and
industry events to demonstrate technological competence
Weakness (Internal Factors)
Threat
(External Factors)
Compete with low cost Indian and Chinese technology providers
by partnering with local companies. Indigenise technology to
achieve higher ROI
‣ Ride on experience of local partner to successfully bid for
municipal projects
‣ Employ local partner to overcome bureaucratic hassles
‣ Customise offerings as per varied climatic / usage
considerations
‣ Proactively protect IP rights by scrutinising partners and
ensure timely filing of patents and trademarks
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India-EU: Creating Market Alliances
Identification Resolution Matrix
The Identification-Resolution matrix seeks to offer simple but
powerful solutions acquired through rigorous research and
interaction with various key stakeholders across the value chain. It
clearly enumerates the challenges faced by EU SMEs in the
wastewater sector and the intensity of the respective impacts.
IDENTIFICATION - RESOLUTION MATRIX
Challenge
Issues faced by
European Cos
Impact Severity Solution
Red Tapism:
Excessive
regulations and
unnecessary
paperwork
Delays decision
making process
Creates
disinterest
Start the regulatory
process early
Keep all necessary
documents / satisfy
formalities
Partner with a local
player
BUREAUCRACY
Lack of
Transparency:
Unclear policies
Unavailability of
critical information
/
miscommunication
Delays operations
Untapped
incentives and
benefits
Confusion in filing
tenders
HIGH
Approach consultants
/ Chamber of
Commerce for
comprehensive
information
Contact local embassy
and trade facilitation
bodies
Seek approval from
various regulatory
bodies
Delays in starting
operations
Creates confusion
Utilise local Liaoning
Partner to expedite
approvals
Untimely payment in
government project
Hampers working
capital
requirements
Can select local
partner with sufficient
funds
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Challenge
Issues faced by
European Cos
Impact Severity Solution
Low Demand: EU’s
high-tech solutions
~30-50% expensive
than ones available
locally
EU goods suffer
from low demand
Tenders invariably
go to lowest
bidder; making EU
cos.
Uncompetitive
Formulate India
specific business
model strategies
(product, value,
pricing)
Initially, import only
niche products from
home country
Localise parts of
value-chain to derive
cost benefit
COST SENSTIVITY
Fierce Competition:
Expensive EU
products fail to
compete with
local and Chinese
products
Poor consumer
awareness
diminishes value
of superior EU
technology
Difficult to
compete for
general tenders
Low demand for
EU products
HIGH
Opportunity for SMEs
in
‣ Tertiary sector of
Class A cities
‣ Class B cities
lacking adequate
treatment
infrastructures
Tap high potential
regions such as South
India, Maharashtra
and arid and semi arid
section of North India
Compete in niche
areas, which offer
premium for
technology, after a
feasibility check
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India-EU: Creating Market Alliances
Challenge
Issues faced by
European Cos
Impact Severity Solution
IPR ISSUES / TECHNOLOGY TRANSFER
Weak
Implementation of
IPR regulations:
Difficulty in
safeguarding IPR
Slow judicial
redressal
Increase
Intellectual
Property (IP)
Standards (TRIPS-
PLUS Protection):
EU companies don’t
get same level of
protection in India
Procedural delays
in getting IP
registered, leads to
use of unprotected
technology
Loss of business
and reputation
May get exploited
by local partners
and external
infringers
Concern wrt 6
safeguarding IP
Frauds
Misuse of
technology /
design / product
HIGH
Patent products /
technology in India
Avoid importing best
technology
Receive upfront
payment to protect
misuse of technology
by partner
Sign NDA before
sharing technology /
products etc.
Enter into legally
binding contracts with
local partners
Scrutinise partner’s
credentials
Watermark designs
File for IPR early
Use product /
technology
commercially only
after patenting
Challenge
Issues faced by
European Cos
Impact Severity Solution
MARKET ENTRY
Tender related
challenges:
Inability to
meet tender
criteria’s due to no
/ limited
experience in India
Short notice for
submission
deadlines
Unable to
successfully bid
and win all
projects (GOI /
Private)
MOD 7
Conduct a feasibility
analysis of the target
market / project to
know criteria's, from
an independent
agency
Gain experience in
sector and build
reputation
Have presence
through subsidiary /
local partner
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Disparity and
complexity in interstate
rules and
regulations
Challenges in
concept selling
w.r.t. utility of the
technology
Huge scale of
operations for
government
projects:
High cost
Long gestation
period
Partner
Identification:
Highly complex and
difficult market
Impacts business
strategy, cost
mechanism and
profitability
Delays operations
Few buyers for
the technology
SMEs may find it
hard to compete
for GOI projects
Unable to meet
high fixed costs
Challenge in
independently
conducting
business
Do cost - benefit
analysis for region
specific considerations
Hire consultants for
exhaustive list of Interstate
rules /
regulations /
incentives
Attend conferences /
networking events to
showcase product /
technology benefit
Provide reference
w.r.t. live projects
undertaken and
benefits accrued
Highlight advantages
of unique services
offered
Highlight Return on
Time through
extended life cycle
benefit of product
Start with private /
Indian consulting
projects (lower scale)
Work as a part of
project consortium
Raise funds
through financial
institutions and
respective local
embassy / trade
bodies
Operate under BOOT
model
Do a feasibility
analysis and partner
identification study
through external
agency
Choose a partner of
similar size / scale /
expertise
Have a project specific
partnership initially
7 Moderate
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India-EU: Creating Market Alliances
Challenge
Issues faced by
European Cos
Impact Severity Solution
FEASIBILITY OF EUROPEAN
MACHINERY IN INDIA
Varied climatic
conditions: High
proportion of EU
technology is
unsuitable for varied
Indian climatic
conditions
Technical
standards /
specification vary
from project to
project e.g. sewage,
desalination etc
Unable to
successfully bid for
various projects
due to
technological
mismatch
Some EU
technologies are
unadoptable as
they fail to meet
requisite criteria
HIGH
Indigenise products as
per Indian climatic
conditions
Evaluate technological
requirement for
different geographies
Have a balanced
portfolio, which finds
application in different
projects
Offer complete range
of solutions
Lower technical
specifications before
entering India
Challenge
Issues faced by
European Cos
Impact Severity Solution
CUSTOMS / DUTIES / TAXES
High customs and
corporate taxes8:
India’s average tariff
is 17% while EU’s
average tariff is 2%
Reduction in
profit margins
Difficulty in
competing with
inexpensive local
and Chinese
products
MOD
Avail custom / excise
subsidies
Invest through SEZ
corridor
Minimise imports
Operate as a domestic
company
Adopt long term
perspective in India
‣ Offer after-sales
support to encourage
repeat purchase
Initially bid for AMC’s
Generate revenue
through by-products
‣ Utilise carbon credits
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Challenge
Issues faced by
European Cos
Impact Severity Solution
CAPITAL RAISING
Difficulty in
raising capital for
project execution /
business
operations: Unable
to meet / maintain
WC 9 and expansion
requirements
Complex capital
raising
criteria’s: Complex
eligibility for raising
capital i.e. Indian
experience /
reputation
Difficulty in
executing
projects
Increases
COC 10 by
raising money
through
expensive
mediums HIGH 11
Inexperienced
cos. face
difficulties in
raising
capital;
impacts
sustainability /
profitability
(MOD)
Tap grants available from:
‣ Home country
‣ Unilateral bodies e.g.
World Bank, ADB etc.
Local Embassy / Trade
promotion bodies
Minimise capital expenditure,
partner with local firms to
invest
Pitch as technology suppliers
/ service providers
8 Compare to EU average
9 Working Capital
10 Cost of Capital
11 High only for Equipment Manufacturers doesn’t impact service providers
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India-EU: Creating Market Alliances
Option Strategy
EU companies can take reference from the strategies adopted by
many European wastewater companies in the Indian context.
Various companies are manufacturing in India and offering a
portfolio of solutions to effectively cater to Indian needs.
Top Scenario Based Solution
Bureaucracy
Cost Sensitivity
Market Entry
Feasibility of European
Machinery in India
Capital Raising
Information not available in the public domain, solutions vary
from case to case basis
Wartsila a European Company decided to import critical parts
and manufacture others locally in India. The company started
importing high capacity diesel engines from European suppliers
and manufactured less critical parts in India.
REMONDIS, a German water management company entered
India in 2009 by acquiring a local company called Shrushti
Consultants. REMONDIS carefully screened the Indian market,
did its initial due diligence and feasibility analysis and choose
Shrushti, which had over 11 ongoing wastewater contracts and
catered to clients such as Tatra, VW and Seco Tools. By
following this mechanism REMONDIS reduced its market entry
challenge.
EIMCO Water Tech. offers a complete suite of water
management solutions. The company services Municipal and
Industrial sectors, thereby catering to varied needs and
requirements. It also offers a complete range of water
management offering such as Sludge, Reuse, Waste to Energy,
Water Treatment products and services. In addition, it provides
Engineering, Manufacturing, and Installation services.
Degremont, a subsidiary of the French water giant Suez has
been awarded a € 33M agreement by Delhi Jal Board (DJB) for a
drinking water treatment plant, the project was externally funded.
Degremont was provided with land, electricity and treatment
cost. Kept free from transmission losses and revenue
collection with assured purchase of treated water and
productivity incentives once the plant begins operations.
Stwr, hindu, Dr. D. D. Basu, Sr. Scientist, CPCB
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Open Trade Benefits
Augmented trade between EU-India, a win-win situation for all stakeholders
Open Trade between India
and EU to create benefits,
both economically and
socially
The relationship between EU and India has substantially
changed in recent years, from that of aid donor and recipient, to
that of partnership. This has created opportunities for
mutual benefit. India and EU need to work closely and ensure
that all necessary steps be taken to facilitate open trade between
the two parties. The two will benefit immensely from an increase
in bilateral trade both economically and socially. The up-coming
EU-India FTA talks provide an invaluable opportunity to set the
stage for greater commitment from both parties for the next
decade. It provides a potential for ~30% increase in two-way flow
of bilateral FDI. The open trade will seek to realise gains for all
stakeholders’ i.e. political establishments, economy, and most
importantly the common people.
Environmental Invest, Business standard, Europa
EU’s highly sophisticated solutions will find a growing market
opportunity in the Indian economy. On the other hand, India will
benefit from access to state-of-the-art technologies thereby
enabling exponential growth and development. The potential gains
are much higher and can lead to trade induced productivity
improvements driven by technological changes, spillovers between
firms, niche specialisation and economies of scale.
India-EU Synergies:
The market analysis shows complementary trends in economic
developments between EU and India. The two complement each
other in their diversified economic structures in terms of output,
capital stock, human resources and trade in goods and services.
EU's exports of goods to India are predominantly intermediary
products for further manufacturing whilst India's exports to the EU
are in both primary products and finished consumer goods.
Increased EU-India Trade will lead to huge synergistic gains for
the two parties. EU is India’s largest economic partner with trade
in goods worth about € 46B and in services roughly € 10B. India’s
main exports to the EU include textiles, chemicals and machinery,
while imports include machinery and transport equipment.
Clean Technologies sector has been making huge strides and is
thereby an important component in the overall trade activities. India is
a huge market for advanced wastewater technology products and
provides ample growth opportunities for European companies.
Experts estimate India’s EGS sector to be in the range of € 4.1B - €
7.8B with an anticipated annual growth rate of ~10-12%.
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India-EU: Creating Market Alliances
Indian consumers to
benefit from:
Easy access to high -
tech products
Affordable prices
Environmentally
compatible offerings
Consumer Benefit:
Growing trade between India and Europe will greatly benefit the
consumers on both sides. End users, whether a commercial or a
domestic unit, will benefit from free access to technology at
affordable price. The Indian consumer segment in the
wastewater management sector is keenly awaiting access to
advanced technology offered through EU goods and services. The
current customer demand is not met internally and there is a
huge demand-supply mismatch. The municipal and industrial
waste is not treated completely and has led to a chaotic civic
situation.
Increased focus on recycle, reuse and zero discharge in India,
provides ample opportunities for EU technology transfer.
Following are the major benefits to the consumer sector:
Lower Price: The Indian customer segment (municipal /
industrial) will benefit from lower prices due to increase in
trade between India and Europe. FTA talks provide an
opportunity for reduction in tariff barriers for wastewater
technologies. The EU technology will become cheaper in India
and benefits can further trickle down to the customers in the
form of lower price for products and services.
Access to High EU Technology: Reduction in tariff and
non-tariff barriers between the two parties will provide an
impetus to trade. As per our interaction with various KOL’s
there are hundreds of wastewater companies i.e.
manufacturers and service providers that are waiting to enter
India and expand their operations. Indian wastewater sector
will have greater access to niche EU technologies and gain
critical know-how on its usage and benefits.
Increased Choice: Open trade will provide a plethora of
alternatives to the consumers in India. They will have various
technology options to choose from based on cost and quality
considerations.
Environmentally Friendly Technology: EU products and
services conform to stringent international standards on
environmental benchmarks. The Indian consumers will benefit
from these green technological solutions, which will reap rich
rewards over the next few years and onwards.
Environmental Invest
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Eliminating Trade Barriers:
Coming FTA talks are at an opportune time for India and Europe
to work towards eliminating trade barriers that are unfavourable
to free trade between the two partners. There is a growing intent
on either side to reduce / eliminate tariff and non-tariff barriers,
enabling greater trade. We have identified and closely analysed
the key trade barriers that continue to thwart open trade between
India and Europe. Mutual trade will greatly benefit if these
bottlenecks are eliminated or significantly reduced.
Trade Barriers to be
eliminated by Government:
Tariff:
‣ High Import Duties
‣ Inter State Tax
Disparity
Non Tariff:
‣ Unclear Legal /
Regulatory
Environment
‣ Red Tapism
Following are the key tariff barriers that require attention:
Import Duties: India and EU should completely
eliminate duties on at least 90% of tariff lines with the
remaining 10% to be negotiated or completely excluded. This
high rate makes EU products uncompetitive in India. Special
provisions should be offered to Clean Technology sector with
import subsidies for all technologies.
Inter State Tax Disparity: Indian political set-up needs to
regulate inter-state taxation. Government needs to simplify and
rationalise the inter-state tax structure, GST has been
proposed that will greatly help eliminate this problem and
enable uniform pricing across all Indian states
Non Tariff-Barriers that need to be addressed:
Weak or Unclear Legal / Regulatory Environment: India
needs to enforce stringent rules and ensure timely
implementation for environmental policies and judicial
redressal. IPR related issues should be resolved proactively to
protect the interests of domestic and foreign investors and
encourage import of advanced technology solutions. Various
EU wastewater products have been copied in India and fraud
cases are still awaiting justice.
Red-Tape: Government needs to have a central body to deal
with market entry procedures and requirements for a smooth /
speedy process. There is need to welcome FDI by eliminating
unnecessary paperwork and expediting timely decision making.
Part of the shift to a more sustainable waste management
mechanism, the public sector is expected to be proactive in
creating a welcoming environment for EU waste management
companies. To find solutions, we will need to draw on a cocktail of
existing and new policy approaches, a more transparent approach
and stringent legislative machinery. This will encourage EU
companies to successfully enter and conduct business in India.
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India-EU: Creating Market Alliances
Recommendations for Government
Government should look towards creating an enabling
environment for EU Wastewater companies in India. Government
is expected to proactively revise certain regulatory policies and
adopt progressive measures in the wastewater sector to make it
globally competitive and self-sufficient.
Key Recommendations:
Decentralised model to be followed for Wastewater Treatment
across India
Stringent IPR implementation and faster legal redressal
Incentivise Municipalities and Industrial Units to use advanced
technology wastewater solutions, which will optimise the use of
depleting water resources i.e. recycle and reuse
Implement GST to simplify and transform the whole country
into a common market
Single window system for facilitating entry and business
requirements for foreign companies
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APPENDIX
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India-EU: Creating Market Alliances
India EU Trade & Investment Relations
India – EU Trade & Investment Relations: Increased mutually supporting relations between EU-
India fostering Trade and Unity
EU is India's largest trading partner in goods and second largest
trading partner in services (after the US). It’s also a source of
advanced technology and a significant donor. In the last
decade, both countries have come together to increase the trade
relationship and thereby become stronger economic allies. EU
and India have an institutional framework in place across levels,
enabling decision makers to interact with each other, highlighted
below:
Annual EU-India Summit
Senior-official level Joint Committee
Sub-Commission on Trade
Working groups on technical issues such as TBT, SPS,
agricultural policy or industrial policy
Driving force behind EU-India relations will continue to be trade
and commerce. With the conclusion of the India-EU trade and
investment agreement expected by the end of the year, trade is
likely to grow significantly. High economic trade between the two
countries creates a win-win situation for both, as there is
immense potential to explore synergies. The India-EU bilateral
trade 12 is expected to exceed € 70.7B by 2010 and € 160.6B by
2015.
EU -India, Trade in Goods, 2007- 2009
(In € B)
26.6
29.5 29.5 31.6
25.4
27.5
2.9 2.1 2.1
2007 2008 2009
Imports Exports Balance
12 According to FICCI-Grant Thornton
India Report, Europa
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A more open trade regime is replacing import substitution and
protectionism. Much of the economy is open to FDI. Sectoral FDI
restrictions have been eased and overseas ownership caps
lifted. Since 2000, the FDI regime has been an OECD-type
“negative list” approach in which all sectors that are not on the list
are open to foreign investment. In most manufacturing sectors,
100% foreign ownership is now possible and much FDI now
comes through the “automatic route”. Foreign exchange
restrictions relating to investment have been relaxed.
Also, public ownership of industries has substantially reduced
as many sectors that were previously reserved are now open to
private enterprises, including overseas investment.
EU27 - India Trade in Commercial
Services (Excluding "Government"),
2007-2009 (In € B)
7.1
9.6
7.9
8.4 8.6
7.4
2.5
0.5
1.2
2007 2008 2009
Imports Exports Balance
4.0
3.0
EU27-India, FDI Trade,
2007-2009 (In € B)
3.7
3.3 3.2
2.8
1.0
0.4
2007 2008
-0.4
2009
Inflow Outflow Balance
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India-EU: Creating Market Alliances
Further, experimental economic zones have been set up to test
further investment liberalisation measures. The government has
concluded many bilateral investment promotion agreements and
double taxation avoidance agreements since the mid-1990s.
In short, the overall framework for investment, both domestic and
foreign, is becoming more supportive in order to reap the full
benefits of FDI for growth opportunities in India.
In the Wastewater sector, EU-India Trade has made huge
strides in the recent past with high import of environmental goods
in India from EU. Various EU companies have already entered the
Indian market. EU is also becoming a prime destination for
India’s outward investment in sectors which include Steel,
Pharmaceuticals, Automobiles, IT and Energy.
EU, Export Partners - Percentage Distribution,
2009 ( In € B)
United States,
204.5, 19%
Others, 509.6,
47%
€ 6T
€ 1,094 B
Switzerland,
88.3, 8%
China, 81.6, 7%
Russia, 65.5, 6%
India, 27.5, 3%
Japan, 35.9, 3%
Turkey, 43.8, 4%
Norway, 37.5,
3%
India, Import Partners- Percentage Distribution,
2009 (In € B)
EU27, 30.3, 17%
Others, 87.9, 49%
€ 179.3B
China, 19.9, 11%
United States,
13.0, 7%
Saudi Arabia, 9.7,
6%
Europa, OECD
Australia, 9.1, 5% United Arab
Emirates, 9.4, 5%
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Entry Regulations
Overseas companies entry facilitated through routes guided by regulatory authorities,
highlighting guiding procedures to set-up business operations in India
Regulatory Authorities
for establishing
business set-up:
Secretariat for
Industrial Assistance
Foreign Investment
Promotion Board
Project Approval
Board
RBI
SEBI
Registrar of
Companies
65% of European SME’s
intend to invest little to
negligible capital (€ 1-
3M) in India directly
Prospective EU companies can enter Indian markets through the
following routes:
As An Indian Company: A foreign company can commence
operations in India by incorporating a company under the
Companies Act,1956 through
‣ Joint Ventures
‣ Wholly Owned Subsidiaries
As An Foreign Company:
‣ Liaison Office / Representative Office
‣ Project Office
‣ Branch Office
Such offices can undertake any permitted activities. Companies
have to register themselves with Registrar of Companies within 30
days of setting up a place of business in India.
A Foreign Company is expected to select one of the above
mentioned modes of entry in the India Market depending on its
scale, financial capability, and Project / Business requirement.
100% of respondents feel
that Capital Entry is not a
challenge
NPES
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India-EU: Creating Market Alliances
Select appropriate entry strategy to effectively penetrate the Indian markets
The following table provides a Comparative Analysis of the various
entry options available and the formalities / procedures to be adhered
to.
Comparative Summary of Entry Options in India
Particulars
Liaison Office
Project Office /
Branch Office
Subsidiary / Joint Venture
Prior approval of RBI for
Setting up
Yes
Yes, except SEZs
(Exempted on
fulfilment of certain
conditions)
GOI / FIPB Approval(Not for
automotive route) and
thereafter compliance with
post facto filings required
Liaison / representation /
communication Activities
Permitted
Yes
RBI permitted activity
allowed
Yes as specified in the
memorandum of association of
the company
Commercial Activities
Permitted
Yes
Manufacturing, (except
SEZ units) not
permitted
Yes, subject to FDI guidelines
Funding of local
operations met through
inward remittances
Yes
Yes
Through equity or other forms
of permitted capital infusion or
borrowings or internal accruals
Unlimited liability Yes Yes
Liability limited to the equity
participation in the Indian
company
Periodical Compliance
requirements under
Companies Act
Yes
Yes
Yes (Higher statutory
compliance)
Annual Compliance
certificate under foreign
exchange management
regulations
Yes
Yes
Yes (Periodic filings also
required)
Compliance requirements
under IT Act
No tax liability
Tax on income earned;
No tax on repatriation
of profits
Liable to be taxed on global
income on a net basis
Dividend declared freely
remittable but subject to
distribution tax of 16.9%
Permanent Establishment
(PE)
LOs generally not
having PE / taxable
presence under
Double Taxation
Avoidance
Agreements (DTAA)
due to limited scope
of activities in India
Generally constituting
a PE and being a
taxable presence
under DTAA and
domestic IT provisions
An independent taxable entity
and not a PE of the PE of the
foreign company unless it is
subject to the provisions of the
DTAA
Investing in India
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EU companies to meticulously follow procedures to systematically set-up India operations
Government has laid down a systematic procedure for setting up a
company in India.
Steps to be undertaken to start new
business operations
Obtaining approval for the proposed name of
the company from the ROC
Drawing up the Memorandum of Association
Drawing up the Articles of Association
Getting the appropriate persons to subscribe to the
Memorandum (a minimum of 7 for a public company and
2 for a private company)
Payment of registration fee to the ROC
Receipt of Certificate of Incorporation
Obtain a certificate of commencement of business
from the ROC in case of a public company
Figure 7: Flowchart highlighting steps to be incorporated while
setting up new office in India
DIPP
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India-EU: Creating Market Alliances
Tax Structures
Tax Structure: Progressive and Nominal Tax Regime encouraging corporate sector
Applicable Taxes
Direct Taxes
‣ Corporate Taxes
‣ Withholding Tax
Indirect Taxes
‣ Sales Tax
‣ Excise Duty
‣ Custom Duty
Corporates are subject to Direct and Indirect Taxes as the case
may be. India has a well-developed tax structure, with the
authority to levy taxes divided between the Central Government
and the State Governments. The Central Government levies
direct taxes such as personal income tax and corporate tax and
indirect taxes such as customs duty, excise duty, central sales tax
and service tax. The States are empowered to levy professional
tax and state sales tax apart from various other local taxes like
Entry Tax, Octroi, etc.
Direct Taxes:
~90% of respondents feel
that remittance of profits to
the home country is not a
Corporate Income Tax
S.
No.
Domestic
Company
Foreign
Company
challenge
1 Regular Tax
Indian Corporate Tax
Structure:
Domestic: ~32%
Foreign: ~41.5%
Where total Income is
more than INR 10M
(€ 0.2M)
Where the total Income
is equal to or less than
INR 10M (€ 0.2M)
2 Minimum Alternate Tax
33.9% 42.2%
30.9% 41.2%
Where total Income is
more than
INR 10M (€ 0.2M)
Where the total income
is equal to or less than
INR 10M (€ 0.2M)
11.3% of the
book profits
10.3% of book
profits
10.6% of book
profits
10.3% of book
profits
3
Dividend Distribution
Tax
16.9% N.A.
4 Fringe Benefit Tax 33.9% 31.7%
India Business, Business Week
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Withholding Tax Rates for payments made to Non-Residents are
determined by the Finance Act passed by the Parliament for
various years. The current rates are:
Interest: 20% of Gross Amount
Royalties: 20%
Technical Services: 10%
Any other Services:
‣ Individuals: 30% of net income
‣ Companies / Corporates: 40% of net income
The above rates are general and in respect of the countries with
which India does not have a Double Taxation Avoidance
Agreement (DTAA).
Indirect Taxation
Sales Tax:
Central Sales Tax (CST): CST is 2% on manufactured goods
Value Added Tax (VAT): Where a sale takes place within a
state, VAT would be levied. Such a tax would be governed by
the relevant state tax legislation. This normally ranges from 4%
to 12.5%
Excise Duty: Excise duty on most commodities ranges between 0
to 12%
Customs Duty: The peak rate of basic custom duty is 10%.
However the aggregate custom duties, including additional duties
and the educational cess, are 26.85%. Several products attract the
basic customs duty of 7.5% which works out to an effective duty of
23.89%.
Service Tax: Service tax is levied at 10.3% of the value of taxable
services (including the education cess and the secondary and
higher education cess) on a broad range of services. Service
providers having aggregate value to taxable services up to ~€ 17K
are kept outside purview of service tax, subject to certain
conditions.
Are Indian Custom & Excise duties percieved to be high as
compared to EU average by EU Wastewater SMEs?
Can't say
11, 22%
Yes
20, 40%
50
India Business, Business Week
No
19, 38%
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64
India-EU: Creating Market Alliances
EU companies to maximise tender conversions by identifying key decision makers and
procedural requirements
Foreign and Domestic Companies operating in Indian Market
through in PPP / Municipal and Private Projects have to conform
to the following Tenders and processes:
INDIAN PROCUREMENT PROCESSES
Players Decision Makers Process Other Important Process
Government
Head of State Board
Head of Municipalities
Board
Float Tenders
Competitive Bidding
Foreign Companies
can be represented by
Appointed Distributors
in tender process
Public Private
Partnership are also
promoted by the
government, which
also provides funding
Public
Sector
Undertaking
Executive heads of new
projects
Short listing
Contractors
Float Tenders
Competitive Bidding
Generally procured
through domestic
suppliers
Good quality and
competitive process
are the key decision
criteria
Private
Top Level Manager
Heads of sustainability
Department
Purchase Manager
Plant Manager
Through direct
contacts to
suppliers
Final decision made
by management
heads
Decisions are based
on criteria such as
compliance,
productivity and
efficiency
Geographical location
is an important criteria
for buying
environmental
technology
Planning Commission
www.ebtc.eu

Building Access for “Waste-Water Management” Companies
65
Trade Barriers
Tariff and Non Tariff barriers continue to impede overseas investments; in spite of government
led initiatives
EGS Sector is not
significantly impeded by
Tariffs, however Non
Tariff Barriers are a
point of contention
Tariff Barriers have
been progressively
reduced
Government has implemented various trade liberalisation
policies to attract overseas companies to enter the Indian
markets. There has been a gradually reduction in trade barriers
to encourage greater participation from various European and
North American countries. WTO agreement, that called for "The
reduction or elimination of Tariff and non-Tariff barriers to
environmental goods and services’, has enabled smooth
operations for all stakeholders. However, a number of barriers
continue to thwart the competitiveness of overseas companies
within the Indian landscape.
Primary interactions exhibit that tariffs do not seem to be a large
problem for the exporting companies.
Key Non Tariff Barriers:
Lack of Coordination
Unclear Regulatory
Environment
Market Distortions
Technical Barriers
Inadequate Policy
Guidelines
The Trade Barriers can be broadly classified under two
categories:
Tariff: These are monetary deterrents that have an impact on
cross border trade
Non-Tariff: These are non-monetary constraints that
negatively impact trade
Also, information around tariff barriers is predictable and
transparent than about non-tariff barriers.
Tariff Barriers:
Tariffs and other Charges on Imports: Trade in Environmental
Goods and Technologies are generally not significantly impeded
by tariffs. Government has progressively reduced Tariff Barriers
such as Import duties and offers import subsidies on certain
wastewater technologies.
Following are a few Tariff Barriers:
Internal Taxation
Services and Investment
Customs / Excise
Non-Tariff Barriers
Europa
Perceived Lack of Coordination / Integration of Policy:
India has a centralised energy sector that is dominated by
state-owned enterprises. In this context, there appears to be a
perceived lack of co-ordination / integration regarding
renewable energy and energy efficiency policies that applies
across ministries, states, and sub-sectors. Policies are often
unclear and inconsistent.
www.ebtc.eu

66
India-EU: Creating Market Alliances
Weak or Unclear Legal / Regulatory Environment: The
enforcement of the legal and regulatory environment in India is
a significant barrier for private sector participation in the
renewable energy market. Regulatory issues such as time
delays and complexity in permitting and sitting of projects pose
additional legal and regulatory hurdles, i.e. IPR issues.
Market Distortions of Fossil Fuels versus Renewable:
Major distortions are lack of accounting for externalities (both
environmental and socioeconomic) in conventional fossil fuels,
price distortions, uneven subsidies and tax structures, and
capital cost accounting versus life-cycle accounting.
Confusion in Implementation of Waste Management
Projects: There have been instances where the role of parties
i.e. government and private sector has not been defined
clearly. Sometimes even inter-party roles are ambiguously
defined when working in a consortium.
Lack of Policy Guidelines for Waste-to-Energy Projects: In
waste-to-energy projects, there is lack of clear policy guidelines
from state governments with respect to allotment of land,
supply of garbage, power purchase arrangements, and
evacuation facilities.
Lack of Strategic Review of Energy Efficiency at the
National and State Levels: In the Energy Efficiency sector,
there is a lack of strategic review to assess priorities for
initiatives on energy efficiency development in the future.
Technical Barriers to trade: Primary insights showcase that
many Asian countries such as China, India, Thailand, South
Korea etc. are expected to get local certification. In India and
South Korea for example, certificates issued in EU Member
States are not accepted. Instead a product that has been
certified in the EU has to be certified again in India.
Is Bureaucracy considered a major challenge
while operating in India by EU Wastewater Cos?
Can't say
10, 20%
No
13, 26%
50
Yes
27, 54%
Europa
www.ebtc.eu

Building Access for “Waste-Water Management” Companies
67
Projected Water Requirement & Sewage Generation
Water Requirements for Various Sectors
Water Demand in km3 ( or BCM)
Sector
Standing Sub - Committee of MoWR
NCIWRD
Year 2010 2025 2050 2010 2025 2050
Irrigation 688 910 1072 557 611 807
Drinking Water 56 73 102 43 62 111
Industry 12 23 63 37 67 81
Energy 5 15 130 19 33 70
Others 52 72 80 54 70 111
Total 813 1093 1447 710 843 1180
S.
No.
State / Union Territory
State-wise sewage generation of Class-I Cities
No. of
Cities
Population’08
(In M)
Sewage Generation
(In MLD)
Sewage Treatment
Capacity (In MLD)
1 Andaman & Nicobar 1 0.1 12 -
2 Andhra Pradesh 47 20.1 1760.6 654
3 Assam 5 1.4 380.14 -
4 Bihar 23 5.8 1009.7 135.5
5 Chandigarh 1 1.0 429.76 164.79
6 Chhattisgarh 7 2.5 350.47 69
7 Delhi 1 14.9 3800 2330
8 Goa 1 0.1 9.79 -
9 Gujarat 28 14.7 1680.92 782.5
10 Haryana 20 5.5 626.69 312
11 Himachal Pradesh 1 0.2 28.94 35.63
12 Jammu & Kashmir 2 1.9 213.93 -
13 Jharkhand 14 5.0 830.47 -
14 Karnataka 33 15.1 1790.4 43.44
15 Kerala 8 3.8 575.17 -
16 Madhya Pradesh 25 10.8 1248.72 186.1
17 Maharashtra 50 40.3 9986.29 4225.25
18 Manipur 1 0.2 26.74 -
19 Meghalaya 1 0.2 20.84 -
20 Mizoram 1 0.3 5.71 -
21 Nagaland 1 0.2 13.62 -
22 Orissa 12 3.3 660.73 53
23 Pondicherry 2 0.5 56.46 -
24 Punjab 19 6.3 1528.26 411
25 Rajasthan 24 9.6 1382.37 54
26 Tamil Nadu 42 16.9 1077.21 333.42
27 Tripura 1 0.2 24 -
28 Uttar Pradesh 61 25.8 3506.01 1240.13
29 Uttrakhand 6 1.2 176.97 18
30 West Bengal 60 19.8 2345.21 505.92
Total 498 227.7 35558.12 11553.68
India Environmental
www.ebtc.eu

68
India-EU: Creating Market Alliances
Abbreviations
(E) Estimated KLD Kiloliters per Day
°C Degree Centigrade KOL Key Opinion Leader
AAR Authority for Advance Rulings L1 Lowest Bidder
AMC Annual Maintenance Contract LO Local Operations
B Billion Lpd Litres Per Day
B2B Business to business M Million
B2C Business to Consumer m3 Cubic Meter
BCI Business Confidence Index Mahagenco
Maharashtra State Power Generation
Corporation
BOT Build, Operate and Transfer MBR Membrane Bioreactor
BRIC Brazil, Russia, India and China Mg Milligram
CAGR Compounded Average Growth Rate Ml Millilitre
CBDT Central Board of Direct Taxes MLD Million Litres per Day
CBEC Central Board of Excise and Customs MPN Most Probable Number
CEE Central and Eastern European NCEF National Clean Energy Fund
CETP Common Effluent Treatment Plant NDA Non-disclosure Agreement
COC Cost of Capital NGO Non-Government Organization
CPCB Central Pollution Control Board NMC Nagpur Municipal Corporation
CPI Consumer Price Index NRI Non Resident Indian
CST Central Sales Tax OECD
Organization for Economic Co-operation and
Development
DJB Delhi Jal Board PAB Project Approval Board
DM Demineralisation PE Permanent Establishment
DTA Deferred Tax Assets PESTLE
Political, Economic, Social, Technological, Legal
and Environmental analysis
DTAA Double Taxation Avoidance Agreement PPP Public-Private Partnership
EC European Commission RBI Reserve Bank of India
EEC European Economic Community ROC Registrar of Companies
EGS Environmental Goods and Services ROI Return On Investment
EPA Environmental Protection Act SEBI Securities and Exchange Board of India
EPC Engineering, Procurement and Construction SEZ Special Economic Zone
EU European Union SIA Secretariat for Industrial Assistance
FDI Foreign Direct investments SIA Secretariat for Industrial Assistance
FII Foreign Institutional Investments SME Small and Medium Enterprise
FIPB Foreign Investment Promotion Board SPCB State Pollution Control Board
FIPB Foreign Investment Promotion Board SPS Sanitary and PhytoSanitary measures
FTA Free Trade Agreement STP Sewage Treatment Plant
FY Financial Year T Trillion
GDP Gross Domestic Product t/d Tonnes per day
GOI Government Of India TBT Technical Barriers to Trade
IPR Intellectual Property Right TSDF Treatment, Storage and Disposal Facility
IRR Internal Rate of Return UF Ultra Filtration
IT Information Technology ULB Urban Local Bodies
IWWA Indian Water Works Association UN United Nations
JBIC Japan Bank for International Cooperation UV Ultra Violet
JNNURM
Jawaharlal Nehru National Urban Renewal
Mission
VAT
Value Added Tax
K Thousand WTO World Trade Organisation
www.ebtc.eu

About EBTC
The European Business and Technology Centre (EBTC) supports EU cleantech
companies and researchers on their market entry to India and offers hands-on support
in the early stages of expansion. Through its offices in New Delhi, Mumbai, Bangalore and
Kolkata, EBTC is offering complete end-to-end solutions to clean technology companies
who want to enter and be successful in the Indian market. EBTC’s efforts focus on 4 key
sectors – Biotech, Energy, Environment and Transport – all offering enormous scope for
closer EU-India collaboration – be it in business, science or technology.
EBTC – A Service Provider for European Business & Research Communities
Whether you are an entrepreneur running a company in Europe, working for or managing
an EU-based SME, a research organisation, or an academic at one of Europe’s universities
or institutes, EBTC can help you identify and exploit the best opportunities for interacting
with India. EBTC’s services are offered in close cooperation with the bilateral Chambers of
Commerce of the EU Member States, Embassies’ commercial and science & technology
departments and regional trade promotion agencies.
Which services are offered?
• Market Intelligence
––
Advice on securing, developing & marketing IPR in India
––
Information on ‘Doing business in India’
––
Assistance in dealing with legal & regulatory requirements
––
Information on Standards & Norms
––
Identification of funding sources
––
Market overview reports & feasibility studies
––
Sectoral market studies with focus on NTBs

• Connecting EU and Indian Business & Research Communities
––
Identification of projects at Indian State level
––
Building of EU-wide consortia
––
Organization of sector-specific pan-EU Business & Research Delegations to India
––
Business & Research Partner Search
––
Facilitating trade fair and conference participation
• Supporting Services
––
Cleantech Incubator: offering individual workstations in EBTC’s office premises
––
Advice on market access issues
––
Support in Business to Government (B2G) activities
Where to find EBTC?
• 1 head office in the heart of New Delhi
• 3 regional offices in Mumbai, Bengaluru and Kolkata
Contact Details:
European Business and Technology Centre
DLTA Complex, South Block, 1st Floor
1, Africa Avenue, New Delhi 110 029, INDIA
Tel: +91 11 3352 1500
Fax: +91 11 3352 1501
Email: info@ebtc.eu
Website: www.ebtc.eu

EBTC New Delhi – Head Office
DLTA Complex, South Block, 1st Floor
1, Africa Avenue, New Delhi 110 029, INDIA
Tel: +91 11 3352 1500
Fax: +91 11 3352 1501
info@ebtc.eu
www.ebtc.eu
New Delhi | Mumbai | Bangalore | Kolkata | Brussels
This publication has been produced with the assistance of the European Union. The contents of this
publication are the sole responsibility of the European Business and Technology Centre and can in no way
be taken to reflect the views of the European Union.
Partners:
© 2011 ebtc
EBTC is a programme co-funded by the
European Union and coordinated by
the Association of European Chambers of Commerce and Industry