Adopting best environmental standards for new units would give India a competitive advantage

Adopting the best environmental standards and practices for new units would give India a competitive advantage as global supply-chains seek to become green and sustainable

Ajay Shankar
Apart from the ready availability of land with quality infrastructure and connectivity, speedy clearances are key to attracting global supply chains to India. The time taken in getting environmental clearance usually comes up at the top of the list of expected delays. The draft Environmental Impact Assessment (EIA) notification is an attempt to address this problem. It has generated a huge backlash from the environmentalists. A different approach could, perhaps, be a win-win for all.

It can be nobody’s case that India should have anything but the highest environmental standards. Positive perceptions on this account add to the brand value of firms as well as nations. There is also no real problem in giving speedy environment clearances and at the same time having the highest standards. The difficulty lies in the prevailing processes. At present, the requirement is for an EIA study for each project.

This takes quite some time. This is then considered by an expert committee that may want to have some clarifications. It goes into the technology proposed to meet environmental standards. It also looks at the adequacy of the relief and rehabilitation package.

How can this be reengineered? The state should promote industrial parks on its own, or in public-private partnership, for different categories of industries with earmarked areas and full production capacities. A pharmaceutical industrial park for Active Pharmaceutical Ingredients (API) may be developed in a particular area with an ultimate production capacity.

The EIA study for this should be undertaken with normal rigor and environment clearance obtained. India should adopt global best standards, say, of the European Union, for all new industrial units for air emissions, liquid discharge and solid waste. If a common effluent treatment is the most economical solution, it should be set up by the agency developing the industrial park.

These standards may be made part the environment clearance for the park and be applicable to each unit that is put up there. It should then be possible to allow a new unit to come up with the stipulation that it would have to comply with these prescribed standards. It would not be required to go through the process of getting environmental clearance at all. This would be a radical change. After land allotment, the investor can set up his plant immediately and go into production.

Investment promotion would reach a different level: Here is developed land for immediate possession for a specified type of manufacturing activity, these are the emission standards that are in force, and there would be no need for seeking individual environmental clearances. Sensor-based real-time measurement and logging of critical parameters of emissions into the air and of water discharge to the Pollution Control Board would ensure far better compliance than we have seen in the past.

If, for some reason, there is breach in any key parameter, the plant would have to shut down immediately and set things right. This gives the investor a strong incentive to make sure that his pollution control technology and equipment are robust and he minimises the risk of having to shut down his plant due to any breach of emission norms. The current system of experts satisfying themselves about the efficacy of the pollution control technology proposed to be used followed by the grant of permissions to construct and then commence production by the Pollution Control Boards can be dispensed with.

This approach would need the state to drive assembly of land and development of dedicated industrial parks for toys, textiles, electronics hardware, chemicals, machine tools, etc. The softer option, in vogue, of permitting direct purchase of agricultural land for an industrial plant and granting land use change is not suitable for rapid industrialisation and should be discontinued. It also makes for weaker compliance of pollution control standards. Managing liquid discharge is a difficult challenge.

Common effluent treatment plants in planned parks are the answer. Again, solid waste from industrial production needs to be collected and taken to proper disposal sites along with feasible recycling. This is best done in industrial parks.

For natural resource based investments in mining and use of the mineral resources for processing, site-specific environmental and forest clearances are necessary. Coal mining and thermal power generation, iron ore and steel production are typical examples. The ideal approach would be for the government to do geographical planning and develop a list of mines and locations for processing of mineral produce in order of priority with the criterion of least negative impact on the environment and forests.

This may be done through a transparent process with stakeholder consultation. Environmentalists would then be able to contribute to optimising the balance between development and preserving the environment.

Thereafter, the government could create a special purpose vehicle (SPV) for each mine chosen for development and allocate the mine to it. These SPVs could assemble land and obtain environmental and forest clearance. There should be standard relief and rehabilitation packages for each state with only the listing of displaced persons being required. Forest clearance would be speedier if satellite imagery is used to compute the number of trees and their species that would be lost, instead of getting this information from the local forest authorities. Working out the net present value to be paid in compensation is then simpler. All this would be speedier for a state-promoted SPV than for any private investor.

Then these mine-specific SPVs with clearances can be taken over by the select private investor. The risk for the private investor would be far lower. The mine could go into production within two years. A similar SPV approach of assembling land, getting environmental and forest clearance for nearby steel and aluminium plants would also be equally beneficial.

Success is essential for getting global supply chains into the country and for ‘Make in India’. Adopting the globally best environmental standards and practices for new units would give India a competitive advantage as global supply chains seek to become green and sustainable.

The author is distinguished fellow, TERI, and former secretary, DIPP