EXPORT POTENTIAL OF SUSTAINABLE GOODS & SERVICES CONSIDERING ENVIRONMENTAL ISSUES*

Mohammed Saqib msaqib@icec-council.org

The views presented here do not necessarily reflect the views of the Foundation, its officers, staff, or trustee.

Fellow, Rajiv Gandhi Institute for Contemporary Studies, Rajiv Gandhi Foundation, New Delhi. Author is grateful for the support provided by Sejal Worah, Dennis Palmin and Rajesh Sehgal of WWF.

TABLE OF CONTENTS 1. Executive Summary

Purpose and Scope Sample Base Key Findings Ranking of States

4
4 5 6 7

2. Background Study
Overview Socio-Economic Pressure Environmental Norms: State-wise Explanation Rising Trade and Export Scenario

10
10 11 20 27

3. The Approach: Methodology 4. Primary Findings

EPCs and Industry Associations Indian Companies and Sustainability Process Case Studies: Model Companies

34 39
41 71 117

5. Recommendation and Conclusions

Recommendation Conclusions

146
147 148

Appendix
List of Respondents Questionnaires

EX E C U TIV E S U M M A RY

01

EXPORT POTENTIAL OF SUSTAINABLE GOODS & SERVICES CONSIDERING ENVIRONMENTAL ISSUES

PURPOSE AND SCOPE: The main objectives of the research were classified as: Identifying various companies in different states who are promoting sustainable development of goods and services. Understanding importance of environmental issues in trade and investment. Understanding degree of inclination of Indian organizations in 6 industrial sectors towards Corporate Social Responsibility and their involvement towards environmental considerations. Finding out the ranks of states of India on the basis of their proactiveness in promotion of sustainable good and services. Finding growth in exports of Sustainable goods and services and thereby understanding its impact on companys market share. Look into the environmental-friendly business practices that the companies in various sectors encourage.

SAMPLE BASE: For conducting the study, various companies in 6 specific sectors were identified and their top level managers interviewed. To gain deep insights into the pro-activeness of different states in India, many industry experts, members of associations and councils were interviewed. The sample break up was:

SECTOR
IT Auto Components Steel Finance Construction (Consultancy) Energy Equipment Manufacturers Industry Associations & Councils Total respondents Separate discussion

SAMPLE
30 20 5 5 5 5 13 83

CITY
Chennai, Bangalore & Hyderabad Gurgaon, Pune Jamshedpur, Delhi, Mumbai, Mumbai & Delhi Mumbai & Delhi Mumbai & Delhi Delhi

guidelines/questionnaires

were

developed

for

the

organizations and industry associations and export promotion councils. The distribution of sample was selected in consultation with the client across India.

The list of companies, associations and councils interviewed for the study are mentioned in the Annexure.

KEY FINDINGS:

India is one of the fastest growing economies of the world and will play a major role in future. The huge population which was a burden until few years ago is presently its biggest asset. However this asset is putting a tremendous pressure on the natural resources and biodiversity of the country.

Industries are slowly shifting towards production and export of sustainable goods and services but the rate is quite slow.

Developing countries like India, where most of the resources are spent in meeting the daily needs and where the competition is so high even at the grass root level, the companies think that they dont have the luxury to concentrate too much on environmental considerations.

According to most of the sectors, India has a deficit of the required resources and the available resources are also not efficiently used. This is one of the biggest concerns for the country.

The government has still not been able to fix a benchmark for all the sectors regarding environmental regulations that need to be followed. Sectors like finance and IT have been facing problems with an improper benchmark to follow.

Technologies to reduce environmental pollution are very expensive for most of the companies.

Karnataka, Maharashtra and Delhi have been ranked as top three regions which are proactive towards environment.

Majority of the companies across India follow Environmental norms as it is mandatory while dealing with international clients.

Only few companies were of the view that considering environmental issues helps them to deliver value to their stake holder groups.

RANKING OF STATES: Effective management of resources requires participation by all stakeholders. At the local level, strengthening democratic institutions generally leads to better and more sustained management of natural resources. Sustainable development is achieved through optimizing gains from several variables, rather than maximizing those from a single one. This requires government departments, by convention sectorally organized, to work together, or in some cases as a single multi-disciplinary authority. The governance must be strengthened for sustainable development at local, national and international level.

Thus, the study found the level of pro-activeness of separate regions of the state. For this purpose, the councils and industry associations in India were asked to rank the regions of India on the basis of the degree of inclination towards environmental issues and sustainable development. On analyzing the data collected from 10 councils and associations of India, it can be seen that Karnataka is the leader occupying the top slot. This is followed by Maharashtra and Delhi NCR. The top regions in India as per Council and Industry Associations perception are mentioned in the table below: RANK STATES
KARNATAKA MAHARASHTRA DELHI / NCR GUJARAT TAMIL NADU ANDHRA PRADESH UTTAR PRADESH HARYANA WEST BENGAL

1 2 3 4 5 6 7 8 9

B A C KG RO U N D S T U DY

02

SUSTAINABLE DEVELOPMENT IN INDIA

SUSTAINABLE DEVELOPMENT STANDS ON THREE PILLARS: ECONOMIC, SOCIAL AND ENVIRONMENTAL.

SOCIO-ECONOMIC PRESSURES ON THE ENVIRONMENT

POLLUTION NORMS OF STATES

RISING TRADE & EXPORT SCENARIO

India is the 7th largest country of the world with an area of 3.29 million sq km. It is one of the densely populated countries of the world with a population of over 1 billion. Though agriculture contributes less than 24% of the GDP, it employs the maximum working population of the country. The economy is growing at a rate of over 8%. India a nuclear power is considered as one of the fastest growing markets of the world. For India, a large country both populated and poor, to develop in an environmentally sustainable development is not an option but a requirement. On one hand, India is faced with environmental degradation from poverty and population pressures, and on the other, from pollution from increased activities due to economic growth and the consequent change in consumption patterns. While the poor depends on the environment for their livelihood, the process of economic development relies on using natural resources to

produce goods and services. The waste generated from consuming and producing these goods and services are in turn released back into the environment impacting it. The environment provides security for present and future generations, the health of the environment is closely connected with the health of humans, and it is economically beneficial for countries to prevent environmental degradation. The challenge therefore, in making development compatible with the environment is to restructure the economic system in a way that it will not destroy the environment as economic progress continues. Sustainable development attempts to strike a balance between the demands of the economic development and the need for the protection of the environment. A better explanation of the term can be explained by the Venndiagram:

Source: en.wikipedia.org/wiki/Sustainable_development

SUSTAINABLE DEVELOPMENT CONSIDERING ENVIRONMENTAL ISSUES: AN OVERVIEW

Sustainable Development as defined by Brundtland Commission, is "the meeting of the needs of the the present ability of without future Environmental sustainability is defined as the ability of the environment to continue to function properly indefinitely. The goal of environmental sustainability is to minimize environmental degradation, and to halt and reverse the processes they lead to*.

compromising

generations to meet their own needs". A rapidly changing population resource equation, in the face of poverty, and lack of resources create formidable social and environmental problems at national and global levels. Thus, Environment Sustainability in this context: Consumption of renewable

State of environment

Sustainability

resources More than nature's ability to replenish Environmental degradation Not sustainable Equal to nature's ability to replenish Environmental equilibrium Steady-state Sustainability Less than nature's ability to replenish Environmental renewal Sustainable development

Table: Indias Development Indicators Indicator Human Development Index 2003 (rank) Human Poverty Index 2003 (rank) Environmental Sustainability Index 2005 * GHG Emissions 1994 Value 0.602 (127) 31.3% (58) 45.2 (101) 1,228,540 Giga gram per year; 1.3 tons per capita GDP and GDP per capita (2002-03) Rs. 36480 billion, Rs. 29382 per year.

*Source: http//www.yale.edu/esi/

SOCIO-ECONOMIC PRESSURE OF SUSTAINABLE DEVELOPMENT WITH SPECIAL EMPHASIS ON ENVIRONMENT IN CONTEXT OF INDIA

Sustainable development receives various pressures on various grounds which can be summarized under the following heads: The key socio-economic pressures on the environment such as population, poverty, illiteracy, economic growth, changing consumption patterns,

deforestation, biodiversity, air and water pollution, climatic change and trends of urbanization pose pressure on India for sustainable development. 2.1(a) Population India, the second largest populous country, is home to over 16 percent of worlds population while As India has only 2.4% of the worlds total landmass, the population density is at 324 persons per square kilometer (Census 2001) and pressures on the environment are correspondingly high.

accounting for only 2.42 per cent of the total world area. By the year 2025 Indian population may cross 1.4 billion. Demographic growth of such dimension creates enormous pressure on environmental resource base and ecosystems. It will cause serious socioeconomic problems and will necessitate breaking from the businesses-usual scenario. The significance of population pressure is great as it impedes both development and environmental health.

10

2.1(b) Deforestation India has very diverse forest vegetation recording an area of 76.52 million hectors - 23.3 per cent of the total geographical area - while the actual forest cover is 63.3 million hectares - only 19.3 per cent of the total land area of which only 11.2 per cent of the area has forest with a crown density of greater than 40%. Pristine, untouched prime forests of the country have steadily declined and are estimated to be not more As India has only 2.4% of the worlds total landmass, the population density is at 324 persons per square kilometer (Census 2001) and pressures on the environment are correspondingly high. than 3% of the countrys land area, reflecting a qualitative decline of the forests in the country. The forest wealth is dwindling due to: Illicit tree felling Overgrazing Encroachments Forest fires Indiscriminate execution of development projects in the forest areas.

2.1(c) Biodiversity Biodiversity, an essential component of our life support system, is a collective term that encompasses the variety of all-living organisms - plants, animals, micro-organisms on the earth who act collectively in the functioning of nature and in maintaining ecological balance.

11

India is one of the twelve mega-diversity centres in the world with 46,000 plants and 8,000 animal species. With only 2.4 per cent of the worlds land area, Indian biodiversity contributes 8% of the known global

biodiversity. However, our biodiversity is under increasing threat from Habitat loss Reckless over-exploitation Trade in wildlife products Poaching Smuggling

According to estimates over 1500 plant species, about 79 mammals, 44 birds, 15 reptiles, 3 amphibians and several insects are endangered species. 2.1(d) Land and soil degradation Out of the total Indian geographical area of 329 million hectare, 175 million hectare is considered degraded. Degradation is primarily caused through erosion by wind and water. Increased silt load leads to speedy deposition of silt in the dams and reservoirs. Increased emphasis on intensive agriculture and over irrigation has resulted in water logging and reduction in the quality of the fertile areas of the country. 2.1(e) Fresh water As populations grow and water use per person rises, demand for fresh water soars. But the supply of fresh water is finite and threatened by pollution. Evidence of water stress can be seen, as rivers are drained dry. In many parts of the country polluted water, improper waste disposal, and poor water management causes serious public health problems. Water levels are falling in every state particularly over large parts of Punjab and Haryana due to excessive abstraction of irrigation. In the coastal belt of the country groundwater is becoming progressively saline due to salt-water

12

intrusion. Access to safe drinking water, thus remains an urgent need for the public and a headache for the governing bodies. 85 per cent of the population in the urban areas and 79 per cent in rural areas still do not have access to safe drinking water. 2.1(f) Energy Indias energy development programme has been put to severe pressure with the ever increasing demand supply gap and mismatch of resources coupled with non-uniform growth curve. The challenge faced by India in the management and development of the power sector is multi-dimensional and they stem fundamentally from the following: Increase in demand for energy due to rapid industrialization and growing population. Constraint of financial resources for enhancing this infrastructure facility. Limited reserves of coal and fossil fuels and consequent burden on foreign exchange due to increasing imports.

Increased emphasis needs to be paid to promote energy efficiency as well as to develop renewable energy resources for promoting sustainable

development.
Economic Burden due to Energy, Water, Sanitation and Health Problems per year.
Source: Parikh J et.al, 2002

Total (a+b) Working day spent in fuel and water collection and work days lost due to ill health(Rs. Millions)
I II No. of adult working days spent in fuel wood gathering and water collection Adult working days lost due to diseases 2950 833 (Respiratory & Eye related) 66.56(Respirator y & Eye related) 11519.7 1268 (Water & Sanitation related) 32(Water & Sanitation related) 799.26 14469.7 2101

Energy (a)

Water (b)

Direct expenditure on health by adults (Rs. Billions)

III Expenditure on health by adults due to diseases Total economic loss due to improper energy and water facilities and due to health impacts or their procurement & use 98.56

293.54

1092.8

13

2.1(g) Air pollution Air pollution has been growing since the economic development gained momentum. Rapid industrialization, escalating cities and greater dependence on fossil fuels have contributed to the growing menace. Vehicular traffic is the most important source of pollution in all the mega cities. The most prevalent form of air pollution is a high level of Suspended Particulate Matter (SPM), high concentration of Sulphur dioxide (SO2) and CO2 which occur in about 20 per cent of the cities. Air pollution in India is worsening by the day, as many urban areas are becoming lethal gas chambers. Delhi, the capital city, is globally the fourth most polluted city. The exceptional surge in the number of vehicles accounts for approximately 64% of the total pollution load of Delhi. The situation in other cities and towns is no better. 2.1(h) Water pollution Water-water every where but not a drop to drink. Drinking Water is slowly turning from a renewable source to a non-renewable one. The major causes for this change have been: Urbanization Industrialization Over withdrawal of water Agricultural run-off Public apathy The socio-economic costs of water pollution are extremely high: 1.5 million children under 5 yrs age die each yr. due to water related diseases, 200 million person days of work are lost and the country loses about Rs.36,000 crores each yr. Given this, we must aim at water security for present and future generations, make water available to all and preserve its quality.

14

UTILIZABLE WATER PER CAPITA IS DECREASING*

This level of pollution is set to create conflict over water and scarcity even in regions with abundant water (TERI vision, 2001). Water per capita would decrease to 760 by 2050**. The major water polluting industries

Water Availability
Cu.m/person/year

3450

1288

1250 760

include fertilizers, refineries, pulp & paper, leather, metal plating and other chemical industries.

1951

1991

Y ear

1999

2050

Water Use

Most of
4%

the Indian water bodies are heavily polluted with large stretches of most of our rivers having water that is unsafe for drinking purpose. With rapid urbanization and

12%

industrialization huge quantities of waste water enters rivers. The Ministry of Water Resources, September 2007 report on
84%

Agriculture Industry Domestic

artificial recharge of ground water stated that out of a total of 5723 assessment units (Blocks/Mandals/Talukas) in the country, 839 have been categorized as Overexploited, with ground water extraction in excess of the net annual recharge. There are also 226 Critical assessment units where the ground water draft is between 90 and 100 percent of the annual replenishment, apart from 30 blocks having only saline ground water. Our facilities to treat wastewater are woefully inadequate. In class I cities, only 5% of the total wastewater is collected of which only 25% is treated. More than half the cities have no sewage system.

**

Source: Central Water Commission (CWC) 1998, Water Statistics of India, Delhi, India: Central Water Commission.

15

2.1 (i) Solid wastes In India, the current per capita waste generation is very low vis--vis advanced countries, though the actual quantum of waste is large owing to enormous size of our population. In actual quantum, plastic waste alone has increased tremendously over the last few years. The mode of waste disposal predominantly remains through land filling, a conventional but unhygienic method. Alternative modes like composting and other scientific approaches are sparsely used. An inadequate collection and disposal of such wastes, pollutes and degrades land and water resources besides being a health hazard. 2.1 (j) Urban trap The population in Indian cities is growing at twice the rate of the average growth of the countrys population. India may be a rural country but it has one of the worlds largest urban populations. The state of cities and towns is appalling and is worsening at a rapid pace. Most basic services like clean drinking water, sanitation, solid waste disposal, transport and health facilities are crumbling under increasing population pressure besides inadequate housing. As countries industrialize one sees cities grow and traffic increase. This may reflect rapid economic development and industrialization but also results in high levels of energy consumption and emissions. The progress of

urbanization is relatively slow in India compared to other developing countries and the bulk of the population continues to live in rural areas. The urban population increased from 19% of the total population in 1965 to 28% in 2000. It is expected that more than 50% of population in India will reside in urban areas by 2025. This has led to congestion of cities, proliferation of private vehicles, increased energy usage and increased pollution. The transport sector accounts for a

16

major share of consumption of petroleum products in India. Transportation sector is responsible for a large share of air pollutants. Therefore, in order to develop sustainably greater emphasis needs to be placed on developing good public transport systems.

2.1 (k) Climate change Over the last half century, carbon emissions from fossil fuel burning expanded at nearly twice the rate of population growth, boosting

atmospheric concentrations of carbon dioxide, the principal greenhouse gas, by 30% over pre-industrial levels. Fossil fuel use accounts for roughly 3/4th of world carbon emissions. Annual emission of carbon dioxide from industrial countries is currently twice as high as from developing ones. Emissions from developing countries will nearly quadruple over the next half century, while those from industrial nations will increase by 30%, according to the Intergovernmental Panel on Climate Change. In spite of the Climate Change Convention adopted at the Rio-de-Janeiro in 1992, the global carbon dioxide emission has been rising steadily. This is in sharp contrast with the Montreal Protocol, which has received considerable success in cutting down the emission of CFCs and other ozone destroying substances. The situation is grave and needs to be quickly addressed before the whole system destabilizes and leads to mass extinction. 2.1 (l) Economic Growth Some economists say that India is shining. Over the last year the Indian economy has shown good growth rates, low inflation rate, falling interest rates and robust export growth. Just like poverty, economic growth also

Source: Sustainable development: Integrating economic and ecological concerns By: C.K. Varshney

17

leads to pollution, albeit of a different kind. The impact of this growth on environment depends on three major aspects: first is the structure of GDP, second is the change in consumption patterns of the population, and the third is environmental governance.

Share of agriculture (bedrock of India) in the total GDP has been declining over the years from over 50 per cent in the early 1950s to 26 percent in recent years. At the same time the shares of manufacturing, transportation and banking and service sectors have doubled in last 50 years (Economic Survey 2003).

The rise in the service sector share is encouraging as it is environmentally less intensive than the other two sectors. This change is stimulated by liberalization and the rapidly increasing outsourcing of software and IT enabled services by foreign companies. Some of this has to do with the change in domestic consumption patterns as well, for instance the restaurant industry has taken off in the last ten years employing many.

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ENVIRONMENTAL NORMS: STATE WISE EXPLANATION

"Environmental problems are really social problems. They begin with people as the cause, and end with people as victims. They are usually born of ignorance and apathy. It is people who create a bad environment and a bad environment brings out the worst in people. Man and nature need each other, and by hurting one we wound the other......" Edmund Hillary (Ecology 2000)

The three specific Acts that are being implemented and broadly supervised by Central Pollution Control Board (CPCB) and followed by all the State Pollution Control Board (SPCB) are:

1. The Air (Prevention & Control Of Pollution) Act, 1981: This is an Act to provide for the prevention, control and abatement of air pollution in the country so as to preserve the quality of air. Central and State Boards constituted under section 3 and 4 of Water (Prevention and Control Pollution) Act, 1974 were deemed also as Central and State Boards for Prevention and Control of Air Pollution.

2. The Water (Prevention & Control of Pollution) Act, 1974. [Act No. 6 Of 1974]: This Act was enacted for prevention and control of water pollution and maintaining or restoring of wholesomeness of water. The Central and State Pollution Control Boards have been constituted under section 3 and 4 of the Act respectively. The Act was amended in 1978 and 1988 to clarify certain ambiguities and to vest more powers in Pollution Control Board.

19

3. The Environment (Protection) Act, 1986:6 This is an Act to provide for the protection and improvement of environment and for matters connected there with. This is comprehensive umbrella legislation. Salient feature are: i) Central Govt. or any officer delegated by it has been vested with more powers ii) Hazardous wastes (Management & Handling Rules), 1989 (as

amended in 2000) iii) Hazardous chemicals (Manufacture, Storage & Import of hazardous Chemicals) Rules, 1989 iv) v) Biomedical Waste Rules 1998 (as amended) Environmental Statement

One special feature of EP Act 1986 is provision of taking cognizance of offence in court of law by any person after giving notice of 60 days to Central Govt. vi) Other related rules of EP Act are: a) Manufacture Use Import Export and Storage of Genetically Engineered Micro-organisms or cell. b) Scheme of labeling Environment friendly product

('ECOMARK') c) Coastal Zones Regulation notifications i.e. to restrict certain developmental activities along the coastal zone.

4. The Water (Prevention & Control of Pollution) Cess Act, 1977: This is an Act to provide for the collection and levy of cess with a view to augment the resources of Pollution Control Board. i) The Act is applicable to all states where Water (Prevention &

20

Control of Pollution) Act is in force except J & K. ii) The cess is payable by every person carrying on any industry and using water for various purposes as prescribed under Schedule - II of the Act. iii) The cess is based on water consumption, quality and purpose for which water is used.

The various environmental regulations specific to the concerned states are as follows:

S.NO.

STATES
UTTAR PRADESH

ENVIRONMENTAL NORMS Uttar Pradesh Pollution Control Board o o o Prevention and Control of Environmental Pollution. Penalty for Contravention of the Act. Environment Impact Assessment Rules 1994.

1.

Haryana State Pollution Control Board (HSPCB) o o

HARYANA

o o o o o

2.

Hazardous Wastes (Management and Handling) Rules, 1989 Bio-Medical Waste (Management and Handling) Rules, 1998 Municipal Solid Waste (Management and Handling) Rules, 2000 Re-Cycled Plastic Manufacture & Usage Rules, 1999 Noise Pollution Rules, 2000 Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 The Environment (Protection) Rules-Emission Standards for D. G. SE Batteries Rules, 2000

21

 Tamil Nadu Pollution Control Board (TNPCB)

TAMIL NADU

3.

o o o

Manufacture, Use, Import, Export and Storage of Hazardous Micro -organism Genetically Engineered Organisms or Cell Rules, 1989. The Chemical Accidents (Emergency Planning, Preparedness and Response) Rules, 1996. The Recycled Plastics Manufacture and Usage Rules, 1999 as amended in 2003 The Batteries (Management & Handling) Rules, 2001

Andhra Pradesh Pollution Control Board (APPCB)

ANDHRA PRADESH

o o

4.

o o o

Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 Manufacture, Use, Import, Export and Storage of Hazardous Micro-organism Genetically Engineered Organisms or Cell Rules, 1989. Coastal Regulation Zone Bio-Medical Waste (Management and Handling) Rules, 1998 Recycled Plastics Usage Rules, 1998 (Draft)

MAHARAS HTRA

Maharashtra Pollution Control Board (MPCB) o o o Biomedical Waste (M&H) Rules, 1998 Hazardous Waste (M&H) Rules, 2000 Municipal Solid Waste Rules, 2000

5.

Gujarat Pollution Control Board (GPCB)

GUJARAT

o o

6.

The Hazardous Wastes (Management & Handling) Rules, 1989 The Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989

UTTAR PRADESH:

Uttar

Pradesh

Pollution

Control

Board

(a

statutory

organization

entrusted to implement Environmental Laws and rules within the jurisdiction of the state of Uttar Pradesh, India) looks after the pollution and

22

environmental norms of the states. The various acts enacted under the supervision of the Board are listed below:

Prevention and Control of Environmental Pollution. Penalty for Contravention of the Act. Environment INSURANCE Impact Assessment Rules 1994.
IABILITY

HARYANA: Haryana State Pollution Control Board (HSPCB) performs its regulatory duty under the supervision of Central Pollution Control Board. The Acts that are supervised by the board are as follows: Hazardous Wastes (Management and Handling) Rules, 1989 Bio-Medical Waste (Management and Handling) Rules, 1998 Municipal Solid Waste (Management and Handling) Rules, 2000 Re-Cycled Plastic Manufacture & Usage Rules, 1999 Noise Pollution Rules, 2000 Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 The Environment (Protection) Rules-Emission Standards for D. G. SE Batteries Rules, 2000

TAMIL NADU:

Tamil Nadu Pollution Control Board (TNPCB), established in 1982, functions with Head Office at Chennai. The different norms followed explicitly by the board are: Manufacture, Use, Import, Export and Storage of Hazardous Micro -organism Genetically Engineered Organisms or Cell Rules, 1989.
SOURCE: 1. UTTER PRADESH POLLUTION CONTROL BOARD website: www.uppcb.com SOURCE: 2. HARYANA STATE POLLUTION CONTROL BOARD website: www.hspcb.gov.in 3. TAMIL NADU STATE POLLUTION CONTROL BOARD website: www.tnpcb.gov.in

23

The Chemical Accidents (Emergency Planning, Preparedness and Response) Rules, 1996.

The Recycled Plastics Manufacture and Usage Rules, 1999 as amended in 2003

The Batteries (Management & Handling) Rules, 2001 The board follows all the norms followed by Haryana Pollution Control Board except: i) Re-Cycled Plastic Manufacture & Usage Rules, 1999 ii) The Environment (Protection) Rules-Emission Standards for D. G. SE Batteries Rules, 2000.
***

ANDHRA PRADESH:

The Andhra Pradesh State Board for Prevention and Control of Water Pollution was constituted on 24-01-1976. After implementation of Air (Prevention and Control of Pollution) Act, 1981, the Boards name was changed as Andhra Pradesh Pollution Control Board (APPCB). The norms that are supervised by the board for the companies under this state can be summarized as follows: Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 Manufacture, Use, Import, Export and Storage of Hazardous Micro-organism Rules, 1989. Coastal Regulation Zone: Coastal Zone Management Plans of Andhra Pradesh identifying and categorizing the coastal areas up to 500 meters from the high tide line were prepared as per the provisions of Coastal Regulation Zone (CRZ) Notification 1991. Bio-Medical Waste (Management and Handling) Rules, 1998 Recycled Plastics Usage Rules, 1998 (Draft).

Genetically

Engineered

Organisms

or

Cell

SOURCE:

24

MAHARASHTRA:

Maharastra Pollution Control Board (MPCB) is functioning under the administrative control of Environment Department of Government of

Maharastra. The acts that are regulated by it are the same as followed by the other states under the broad perspective of Air Act (1981), Water Act (1974) and Environment Act (1986). Along with this there are also some rules as mentioned for other states which are looked after by MCPB like: I. Biomedical Waste (M&H) Rules, 1998 II. Hazardous Waste (M&H) Rules, 2000 III. Municipal Solid Waste Rules, 2000.

GUJARAT:

The Government of Gujarat constituted the Gujarat Pollution Control Board (GPCB) on 15-10-1974 with a view to protect the environment and to prevent and control the pollution of water in the State of Gujarat, which occupies a prominent niche in sustainable industrial development in the country. Other than following the three important acts the rules that the board supervises are as follows: The Hazardous Wastes (Management & Handling) Rules, 1989 The Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989

4. ANDHRA PRADESH POLLUTION CONTROL BOARD website: www.appcb.org 5. MAHARASHTRA POLLUTION CONTROL BOARD website: www.mpcb.mah.in SOURCE: GUJARAT POLLUTION CONTROL BOARD website: www.gpcb.gov.in

25

RISING TRADE AND EXPORT SCENARIO

FINDING THE PATH TO SUSTAINABLE DEVELOPMENT AND GROWTH IN INDIA: EXPORT POTENTIAL.

During the larger part of the post-reform period (1993-2005), Indias pace of export growth has not been significantly higher though it has accelerated since 2002. In comparison to the pre-reform period (1950-90), the actual growth of exports in the post-reform period has been above the expectation primarily because of growth of world demand.

The export policy introduced within the economic reforms in 1991 primarily focuses on the exchange rate. A major element of this policy shift was the downward adjustment in the exchange rate of the rupee against the major currencies in July 1991. Further, in 1993, the government adopted full convertibility of the rupee on the current account.1

Export Trends in Pre-Reform Period: Brief Overview Exports were largely neglected during the first and the second five-year plans (1952-1956 & 1957-1961), because there was a perception that demands for Indian exports was inelastic. Whilst the world merchandise export was growing at 6.3% per annum during the 1950s, Indias export stagnated (Table 1). As the world merchandise exports expanded relatively faster during the 1960s at 8.8% per annum, the growth rate of Indias exports improved somewhat to 3.6% per annum. Clearly, the country failed to make the best use of the trade possibilities available during the 1950s and 1960s. The share of Indias exports in world exports declined sharply from 1.4% during the 1950s to 0.9% during the 1960s. In order to offset the detrimental effects of overvalued exchange rates and other government policies on exports, various implicit and explicit measures of export subsidization were adopted. World exports registered a hefty growth

26

rate of 20.4 per cent per annum during the 1970s. Buoyancy of world demand and a relatively favorable domestic policy provided a market conducive to a rapid growth of exports from India. It results in the growth of Indias exports of merchandise and services at the annual rate of about 18% and 27% respectively during the 1970s. Joshi and Little (1994), while recognizing the importance of world demand, explained that the export growth of the 1970s was mainly due to the depreciation of the real effective exchange rate REER****, provision of export subsidy and a relatively liberal import policy for export production. Despite the high growth, Indias share in world merchandise exports declined to 0.5% during the 1970s from 0.9% during the 1960s.

The growth rate of world exports turned negative in the aftermath of the second oil price hike, which had its automatic effect on Indias exports which decelerated sharply. During the second half of the 1980s, however, the world economy recovered and Indias exports grew at a healthy pace of 17.8%). According to Joshi and Little (1994), there was a genuine improvement in the export competitiveness of India during this period due to a major depreciation of the REER and increased export subsidies. The capital goods import also witnessed some doses of industrial deregulation and liberalization.

****

Clarification 1. The system of partial convertibility introduced in 1992 established a dual exchange rate for the rupee, which allowed exporters to sell 60 per cent of their foreign exchange in the free market and 40 per cent to the government at the lower official price. The official and market exchange rates were unified with the introduction of full convertibility. 2. REER is the weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by

27

Trends and Patterns of Exports in Post-Reform Period

The process of economic reforms became far more comprehensive and systematic after a severe balance of payment crisis in 1991. Significant reforms were witnessed in terms of removal of state controls on domestic and foreign investment, foreign trade, prices and exchange rates. These reforms were made with the expectation that there would be much efficient resource allocation, greater specialization, diffusion of international knowledge and heightened competition. But Indias export growth didnt react to such reforms in a positive manner. It had accelerated since 2002.

The post-reform period (1993-2005) is divided into three sub-periods: 1993-97 (the period before the East Asian crisis); 1999-2001 (the period immediately after the crisis); and 2002-05 (the period of rapid export growth).

Growth of Exports

During 1993-97, Indias merchandise exports recorded a growth rate of about 13% per annum and services exports showed a comparable growth rate of about 14% per annum (Table 1) in spite of the appreciation of the REER by about 1 per cent per annum. Table 2 shows that the merchandise export growth during this period was, by and large, broad-based with double-digit growth in most of the commodity groups. Within the services sector, the growth rate of exports was the highest for the group miscellaneous (which includes software) followed by insurance (Table 3). As a result of the slowdown in world demand triggered by the crisis in east Asia, merchandise exports of India (and of the world) in 1998 declined in absolute value from the level in the previous year, Even in the phase of depreciation of REER of the rupee by more than 6 per cent between 1997 and 1998. Indias exports showed signs of recovery during 19992001 by growing by about 10 per cent per annum. The growth rate of merchandise exports declined to about 7.6 per cent if petroleum (SITC 33) exports, which skyrocketed from $ 55 million in 1999 to $ 1,929 million in

28

2000 are excluded from the total. As the world economy fully recovered after the Asian crisis, Indias merchandise exports showed a high growth rate of about 25 per cent per annum during 2002-05 (22 per cent if petroleum exports are excluded). In particular, services exports showed exceptional performance, growing at the rate of 45 per cent per annum. The growth was broad-based with almost all the commodity groups (except SITC 9) and services sectors showing double-digit growth rates (see Table 2 and Table 3). It is significant that this high growth occurred despite the appreciation of the REER by about 1 per cent per annum during the period. The latest (provisional) data indicates that the growth momentum of the previous four years continued, by and large, in 2006. The cumulative value of Indias merchandise exports during April-March 2006-07 was $ 124.6 billion (provisional) as against $ 100.6 billion (provisional) in 2005-06. The growth rate of merchandise exports in 2006-07 over the previous year on a like to-like basis is 23.8 per cent. This has been attained in spite of the appreciation of the REER by about 2.8 per cent during April-January of 2006-07.

In sum, Indias exports during the post-reform period have been growing faster than the rate of growth of world exports. This is in contrast to the pattern observed for the pre-reform period, particularly during 1950-80. It appears that the growth of world demand is the most important determining factor of Indias merchandise export growth for both the pre- and post-reform periods. The strong correlation of Indias exports with world exports during the post-reform period is evident from the figure.

29

Table 1: Indicators of Indias Export Growth, 1950-2005 (US $ millions)

Average Annual Growth Rates (a) Period Goods 1950-59 1960-69

Indias Share in Indias Exports World Exports Averages In Goods and Services (Per Cent of GDP),

Services (b) Goods Services NA NA NA 0.36 1.39 0.90 0.54 0.47 0.48 0.60 0.66 NA NA NA 0.81 0.63 0.59 1.07

Averages NA 4.21 5.20 6.05 6.29 10.50 12.52 17.19(c)

0.22 6.30 3.78 3.58 8.77 1.78

1970-79 17.97 20.41 26.61 1980-85 2.39 -0.86 3.79

1986-90 17.76 12.36 10.47 14.14 1993-97 13.30 10.56 14.10 9.22 1999-01 10.26 4.09 9.52 3.07

2002-05 25.29 17.58 45.36 15.16

0.81

1.64

Notes A: Growth rates are calculated using semi-logarithmic regressions. B: Services represent commercial services excluding government services. C: Exports (per cent of GDP) for the year 2005 was extrapolated based on the trend for the previous three years (the average for 2002-04 was 16.08).

Source: Data on merchandise exports (for 1950-2005) and services exports (from 1980-2005) have been accessed from the WTO website; Indias services exports for 1950-79 are from the RBI; Exports of goods and services (per cent of GDP) are taken from the World Development Indicators database, World Bank.

30

Table

2: Indias

Merchandise

Exports

across

Commodity

Groups,

Average Annual Growth Rates

SITC (Standard International Trade Classification) Code Commodity Group 0 1 2 Food and live animals Beverages and tobacco Crude materials, 12.56 8.85 51.12 93-97 14.42 23.44 1999-2001 5.92 -12.54 2002-05 11.44 13.71

inedible, except fuels 3 Mineral fuels,

lubricants and related 4 Animal and vegetable oils

-4.14

403.01

66.65

and fats 5 Chemicals

14.49

-16.35

23.07

20.41

13.61

26.85

6.

Manufactured goods classified 9.70 2.74 19.27

chiefly by material 7 Machinery and transport

equipments 8 Miscellaneous articles

17.10

22.19

35.47

manufactured 9

9.82

5.55

20.72

Commodities and 17.58 26.54 -3.09

transactions not classified according to kind

Source: COMTRADE-WITS (authors calculations). To compute the growth rates of total exports in the last two rows, export values of SITC 33 and SITC 9 (reported in

31

COMTRADE) are subtracted from the total exports (reported in WTO). The WTO data on total exports are used so that these growth rates are comparable with the ones in Table 1.

We use the WTO data in Table 1 as it gives a longer time series (from 1948) than

COMTRADE-WITS (from 1962)

Table 3: Indias Services Exports across Sectors, Average Annual Growth Rates Sector Travel Transportation Insurance Miscellaneous Miscellaneous of which software Total commercial servicesb
a

1993-971999-2001 7.67 6.57 18.26 25.99 NA 1.65 12.51 11.66 4.26 7.27a

2002-05 33.25 36.40 47.22 49.81 35.29

13.96

4.83

45.59

Notes: a Value of software for the year 1999 was estimated based on the share of software in miscellaneous in 2000 (RBI has been reporting separate data on software exports from the year 2000 onwards). b Exports of Government not included elsewhere (Gnie) is excluded. Source: Reserve Bank of India

Source of report: Sources of Indias Export Growth in Pre- and Post-Reform Periods by C. Veeramani

32

ExportGrowth of India vis-a-vis World

70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 -5 -10 -15

Export Growth Rate

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Time

India

World

Source: COMTRADE-WITS (authors calculations).

33

2005

TH E A PP RO A C H : M E T HO D O L O G Y

03

UNDERSTANDING THE EXPORT POTENTIALITY OF SUSTAINABLE GOODS & SERVICES FROM INDIA, TAKING ENVIRONMENTAL ISSUES INTO CONSIDERATION

1a. Purpose and Scope of the Study

The prime objective of the study was to analyze the current growth scenario of exports of sustainable goods and services and its potential in India.

Under the purview of the study, we have attempted to investigate various players in the six industry sectors prevalent and experts from associations and councils to understand the export potential of sustainable goods and services considering environmental issues in the most comprehensive mode possible. On the basis of a secondary research done at the initiation of the study, a primary research plan was developed to understand the dynamics of sustainable development and environmental issues in trade and investment. The main objectives of the study include: Identifying various companies in different states who are promoting sustainable development of goods and services. Understanding importance of environmental issues in trade and investment. Understanding degree of inclination of Indian organizations in 6 industrial sectors towards Corporate Social Responsibility and their involvement towards environmental considerations.

34

Finding out the ranks of states of India on the basis of their proactiveness in promotion of sustainable good and services.

Finding growth in exports of Sustainable goods and services and thereby understanding its impact on companys market share.

Look into the environmental-friendly business practices that the companies in various sectors encourage.

1b. Empirical Methods:

The study uses a mix of research methods to address the challenges of limited data availability. The findings reported here are based on in-depth interviews with various decision makers across the industry players in the market and other members of associations and councils.

These interviews lasted for about an hour (with top level managers of organizations and industry experts) and have been conducted over a period of 60 days. These interviews were conducted at top level within the organizations and members of councils, depending on the availability and resourcefulness of the concerned person.

It was made sure that the sample chosen is the representative of the whole industry. For the sake of simplicity and uniformity, we followed a

questionnaire to serve as a guideline for the interviews and information obtained. The interviews focused on the agenda of their understanding about sustainable development and tried to identify the companys involvement in promoting export of these goods and services. The interviews were kept partially open ended to capture as much information as possible and to boost the exploratory nature of the research. The close ended parts were restricted to maintain the commonality between the various respondents. Separate

35

questionnaires

were

prepared

for

the

different

respondent

groups

(Companies, Associations and Councils).

The survey tried to extract: their understanding of sustainable development and thus find out the degree of importance of environmental considerations for the

company. export potential of sustainable goods and services and impact on companys market share. the industry trends in exports of sustainable good and services, encouragement of environment-friendly business practices, adherence to certifications and schemes, compliance to environmental laws and judicial decisions, their perspective on governments initiative to promote investments in export of such goods and services.

We tried to get the maximum proportional coverage by covering major sectors and experts in the industry. On the other hand, we incorporated various angles like that of companys perception towards potential of sustainable goods and services.

36

1 c. Sample specification:

We covered a total of 83 respondents from the categories mentioned below:

RESPONDENTS
INDUSTRY SECTORS

SAMPLE SIZE
30 20 5 5 5 5 10 1 1 1 83

CITY
Chennai, Bangalore & Hyderabad Gurgaon, Pune Jamshedpur, Delhi, Mumbai, Mumbai & Delhi Mumbai & Delhi Mumbai & Delhi Delhi Delhi Delhi Delhi

IT Auto Components Steel Finance Construction (Consultancy) Energy Equipment Manufacturers EPCs & Industry Associations Planning Commission Ministry of Environment CPCB

Total respondents

ASSOCIATIONS / COUNCILS

37

EXPORT POTENTIAL OF SUSTAINABLE GOODS & SERVICES CONSIDERING ENVIRONMENTAL ISSUES: PART II

04 PRIMARY FINDINGS
01 Export Promotion Council &
Industry Associations
1.1 Ranking of states 1.2 Case Studies of EPCs & Association

02 Indian Companies & Sustainability

Process
2.1 Industrys outlook towards sustainability: Sector-wise 2.2 Case Studies of Model Companies

38

Abbreviations

Councils and Industry Associations

1. BAI: 2. EEPC: 3. ESC: BUILDERS ASSOCIATION OF INDIA ENGINEERING EXPORTS PROMOTION COUNCIL ELECTRONICS AND COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL 4. IWEA: 5. MAIT: INDIAN WIND ENERGY ASSOCIATION MANUFACTURERS ASSOCIATION FOR INFORMATION TECHNOLOGY 6. PEPCI: 7. IMTMA: 8. NAREDCO: 9. SIAM: 10.ISSDA: 11. CER: 12. CDMs: PROJECT EXPORTS PROMOTION COUNCIL OF INDIA INDIAN MACHINE TOOL MANUFACTURERS NATIONAL REAL ESTATE DEVELOPMENT COUNCIL SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS INDIAN STAINLESS STEEL DEVELOPMENT ASSOCIATION COMMISSION FOR ENERGY REDUCTION CLEAN DEVELOPMENT MECHANISM

39

PR IMA RY FIN DIN G S

04

EXPORT

POTENTIALITY

OF

SUSTAINABLE

GOODS

&

SERVICES

TAKING ENVIRONMENTAL ISSUES INTO CONSIDERATION

EPCs & INDUSTRY ASSOCIATIONS - Ranking of states - Case Studies INDUSTRYS OUTLOOK TOWARDS SUSTAINABILITY - Analysis of findings - Case Studies of model companies

01. EPCs & INDUSTRY ASSOCIATIONS

1.1 RANKING OF STATES

We conducted in-depth interviews with 10 councils and industry associations. However, when the representative of these bodies was asked to rank states as per their pro-activeness in promoting sustainable development and consideration of environmental issues. The response rate for this was only 60%, since some of them refused to disclose these details.

[Working Note: The average of ranks have been taken out in order to conclude the lowest average to score to be the highest rank gained (i.e. Karnataka scored 1.8 as an average rank from 6 councils and this being the lowest would be ranked 1). Further there were situations where fellow men of councils only gave ranks to 4 states out of 8 states mentioned. In case of no response the region was ranked 9.

40

The rankings given by the councils for some regions of India are shown in the following table:

RANK

STATES
KARNATAKA MAHARASHTRA DELHI / NCR GUJARAT TAMIL NADU ANDHRA PRADESH UTTAR PRADESH HARYANA WEST BENGAL

EPC's & INDUSTRY ASSOCIATIONS

BAI ESC IMTMA INWEA MAIT NAREDCO

1 2 3 4 5 6 7 8 9

3 10 1 10 10 10 5 2 4

1 5 2 10 10 3 4 10 10

2 3 10 1 5 4 10 10 10

3 2 10 4 1 10 10 10 10

1 2 3 10 10 10 10 10 10

1 3 2 10 10 10 10 10 10

Overall, Karnataka tops the chart and is most progressive region in India as per the councils with respect to sustainable development. This is followed by Maharashtra and Delhi NCR on 2nd and 3rd position. Some of the councils

also ranked regions like Maharashtra, Gujarat and West Bengal which were not included in the questionnaire. Though West Bengal and Haryana have got low ranks overall, they were ranked 4 and 2 by BAI (Builders Association of India) alone.

41

1.2 CASE STUDIES: EPCs & INDUSTRY ASSOCIATIONS

SECTOR-WISE ANALYSIS
BUILDERS ASSOCIATION OF INDIA ENGINEERING EXPORTS PROMOTION COUNCIL ELECTRONICS AND COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL INDIAN WIND ENERGY ASSOCIATION MANUFACTURERS ASSOCIATION FOR INFORMATION TECHNOLOGY PROJECT EXPORTS PROMOTION COUNCIL SOCIETY OF INDIAN MANUFACTURERS (SIAM) NATIONAL REAL ESTATE DEVELOPMENT COUNCIL (NARDECO) INDIAN MACHINE TOOL MANUFACTURERS ASSOCIATIONS INDIAN STAINLESS STEEL DEVELOPMENT ASSOCIATION

BUILDERS ASSOCIATION OF INDIA

Established in year 1941 in Pune, Builders Association of India (BAI) has come a long way in bringing transparency, and accountability among the contractors in the construction industry. This institution provides a very important insight about the ground level situation in the construction industry.

SOURCE BAI website

42

The growth trend of sustainable goods and services is on the positive side but the growth rate is slow. The main reason for this has been the commercial consideration of the projects. The cost of the projects becomes very high if environmental considerations are taken properly. However according to Mr. S.S. Arora (Executive Officer-BAI), now the members are taking environmental issues seriously as these regulations are becoming mandatory.

Also Government of India is promoting the companies which are showing advances on the environmental front through rewards and recognition. BAI, the associations of authorized builders in India, support their members activities by providing them with information about various sustainable opportunities in Indian markets. However no such information about other markets is at hand with BAI. Also the association is actively involved in spreading the issues of Global Warming, development of technologies regarding efficient use of renewable sources of energy etc within its members. In sync with that the association also encourages member companies to work in clusters to find energy efficient solutions. The association is also in touch with similar foreign associations to share knowledge about sustainable goods and services.

Mr. Arora ranked the below mentioned five states as the states which are aggressively promoting the growth of sustainable goods and services:

RANKS 1 2 3 4 5 DELHI HARYANA

STATES

KARNATAKA WEST BENGAL UTTAR PRADESH

43

Commenting on the achievements and scope of improvement Mr. Arora said The Delhi Government is spreading the awareness among the common public and corporate alike about the environmental

protection and use of renewable resources and is concerned about the environment more than other states. Moreover Commonwealth Games is coming up so Delhi govt. is trying to make Delhi a GREEN CITY. All other governments should follow the footsteps of Delhi Government. This will lead to the development of this concept all over the country.

44

ENGINEERING EXPORTS PROMOTION COUNCIL

Engineering Exports Promotion Council was set up in the year 1955 under the sponsorship of Ministry of Commerce to promote exports of engineering goods from India. It has come a long way to become the largest Export Promotion Council with about 12000 members from amongst large corporate houses, trading houses, medium scale Units etc. The council actively pursues various activities with a focus on two objectives of facilitating exports of engineering goods & services and to provide overseas buyers the true value of the products. The growth of engineering goods export is shown in the figure below:
Growth of Indian Engineering Export from 1956-57 to 2005-06 (Value in US$ Million)

20300

15926 11553 3761 10.84

1956-57

61.76
1965-66

488.2

833.88
1995-96 2002-03 2003-04 2005-06

1975-76

1985-86

(Source: www.eepc.org)

Commenting on the growth trend of sustainable goods and services in engineering sector Mr. R. Maitra (Executive Director, EEPC) said Export houses have shown inclination to follow the environmental norms. Engineering Exports has been growing at the rate of 25% during the period 2002-03 to 2006-07. However, the rate of growth in

SOURCE EEPC website. : www.eepcindia.org

45

engineering exports is expected to decline this year on account of Rupee appreciation against the US dollar.

Government of India presently is not providing with any incentives to the companies as such. Engineering Export Promotion Council (EEPC) is mainly there to help in the export of engineering goods and services. It acts like a facilitator to the whole process and is not involved in rewarding the companies in any ways. However EEPC support companies by providing them with information about various sustainable opportunities in Indian as well as foreign markets in case the companies ask for the same. Also the council is actively involved in promoting the information about the benefits of Carbon Trading for SME sector and how it is a good business proposition while helping save the environmental balance within the members. The council is also looking for the possibilities for developing Engineering clusters all over India to work collectively towards finding energy efficient solutions. The council is also in touch with similar foreign councils to share knowledge about sustainable goods and services.

According to Mr. Maitra ranking the states is not within the purview of EEPC and so they do not evaluate different states with any ranking system. According to him all the states are governed by the regulations of Government of India and their respective state governments and follow a definite policy conducive to that states capabilities.

Commenting on the achievements and scope of improvement Mr. Maitra said There is ample scope of developing sustainable exports in India. Special export zones are coming up in the country and with the SEZ model being encouraged, India is on its way to become an export hub of Engineering goods and services.

ELECTRONICS AND COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL

46

Electronics

and

Computer

Software

Export

Promotion

Council

was

incorporated in the year 1989 and is Indias largest electronics and IT trade facilitation organization and is sponsored by Government of India. The council has more than 2300 member companies all through India. The organization has steered the industry to show a CAGR of around 33.5% from the year 1989 to the year ending at 2006-07.***** Fig.1 shows the comparison of growth rate of electronic industry and the GDP growth rate of the country.

Electronic & Software CAGR vs GDP Growth Rate

% Growth

7.5 4.7 4.5 16.4 21.1 18.2 8.5 28.8

9.2 8.4 29.1 24.9

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

Software Industry Growth(%)

GDP rate

According to Mr. S.C. Ray (Advisor-ESC) The meaning of sustainable goods and services is not known to a large mass. So even if they are into the production and export of these goods and services they do not have an idea themselves. But now to survive international competition the exporters have to follow the required environmental

SOURCE ***** ESC website.

47

regulations and take required certifications. So now the trend is a growing one but in most cases the reason is compulsion and not self consciousness of the exporters.

According to him Government of India do promote the companies which are showing advances on the environmental front through rewards and

recognition but the ground situation is not as rosy as it is perceived to be. The companies have to take ISO and CE certifications to export to the European markets but the problem at present is that the companies have started producing two different qualities of the same component; one for exports to the developed economies and another for domestic market and other developing economies.

ESC provides information to companies for export opportunities and requirements of all electronic equipments and exchanges the concerns of exporters with the concerned authorities of other countries. However the council does not provide any incentives to the companies as such or promote any collective research to develop resource efficient solutions. According to Mr. Ray, the council does remain in touch with similar foreign councils to share knowledge about sustainable goods and services. He commented that, according to WTO rules every country when issues a directive regarding exports or imports, it has to consult with export councils of various other countries with which they have direct or indirect ties and their decision may effect the trade of the those countries.

Mr. Ray informed that the council ranks the cities as electronics and software hubs instead of ranking the states. The table below shows the states (along with cities) which are aggressively promoting the growth of sustainable goods and services:

48

RANKS 1 2 3 4 5

STATES KARNATAKA (Bangalore) DELHI/NCR (Delhi, Gurgaon & Noida) ANDHRA PRADESH (Hyderabad) UTTAR PRADESH (Lucknow and adjacent region) MAHARASTRA (Mumbai)

Commenting on the achievements and scope of improvement Mr. Rai said There is lot that remains to be done. The companies should go for new technologies and R&D. The main problem is of funds that are required to be invested. In this regard the council is encouraging contract manufacturing. There are signs of improvement as the number of exporters taking environment related certifications is increasing.

49

INDIAN WIND ENERGY ASSOCIATION

Wind energy is one of the forms of renewable energy and is currently the fastest growing renewable power source. There has been a twelve-fold increase in the use of wind as a source of energy over the last ten years. Indian Wind Energy Association was set up as a non-profit making organization in the year 2002 with a mission to promote and spread awareness about the benefits of wind energy and the crucial role it can play in ensuring a sustainable path for the countrys economic and social development. The association has more than 250 members and the association is also a member of various national and international associations like World Wind Energy Association, FICCI, and CII etc. Commenting on the growth trend of wind energy sector Mr. Rakesh Kakkar (Executive Director, INWEA) said This sector has the potential of generating electricity to the limit of 65000 MW with the support of technology available at present. The installed capacity of wind energy has grown rapidly in the last three years and stood at 7660 MW as on 30th September 2007.

Mr. Kakkar said that government extends various benefits to companies which harness renewable sources of energy. Under section 80-IA of income tax act these companies are exempted from tax for 10 years. Apart from this wind energy plants also get 80% accelerated depreciation in the first year. However the association does not provide any incentives or rewards as such to the company. The country is still not in a position to export wind energy to other countries but the association does take up the issue of expanding wind energy capacity of the country with the government. INWEA conduct its own research for development of wind sector

SOURCE INWEA website. : www.inwea.org

50

in India. The company tries to create awareness about the potential of wind energy in India through their magazines, websites and conferences. The association also targets large organizations like Railways to use wind energy for their captive use.

According to Mr. Kakkar wind energy is still not exported to other countries but he did ranked states based on their installed capacity as:

RANKS 1 2 3 4 5

STATES TAMIL NADU MAHARASHTRA KARNATAKA GUJRAT RAJASTHAN

On the scope of improvement Mr. Kakkar said There is ample scope for India to become a major player in this sector in future. Still only about 12% of the total potential is being used in the country.

51

MANUFACTURERS ASSOCIATION FOR INFORMATION TECHNOLOGY

Manufacturers

Association

for

Information

Technology

is

the

association of IT players of the country and represents 92% of the Hardware Sector (by turnover). It was set up in the year 1982 with few objectives in mind. They were: Develop a globally competitive Indian IT Industry. Promote usage of IT in India. Strengthen the role of IT in National Economic Development. Promote business through International alliances. Promote quality consciousness in the IT industry. Transform the Indian IT industry into World Scale Industry leading to a World Class Usage and thus a World Size Market.

Commenting on the growth trend of sustainable goods and services in engineering sector Mr. Vinnie Mehta (Executive Director, MAIT) said The concept of sustainable goods & services in IT hardware industry is very new. There is not much focus on exports. This can be seen from the fact that a $7 billion market has only 15% of the turnover as exports. Also in IT industry 10% of the companies hold 60% of the market share. In India presently the problem is mainly of end if the life cycle e-waste management. India is doing its bit for efficient e-waste management but the problem is that the majority of this sector is unorganized.

Government of India presently is not providing with any incentives to the companies as such. Mr. Mehta commented that Manufacturers Association for Information Technology (MAIT) presently does not provide any incentives to companies for e-waste management but it intends to provide recognition to the companies which promote environment friendly practices in future.
SOURCE MAIT website. : www.mait.com

52

However MAIT support companies by providing them with information about various sustainable opportunities in Indian as well as foreign markets. Seminars and workshops are held to create awareness about the sustainable development and e-waste management techniques. MAIT also carry out periodic studies along-with different companies or with other associations. Mr. Mehta also informed that in December 2007 we carried out a first-of-itskind study along with German Technical Corporation Agency (GTZ) to inventories e-waste in the country. According to him this industry is very environment friendly in processing because hardly any processing is done in India. The main concern is of the end of the life cycle waste management and in this regard the associations do help create awareness within the industry. The association is also looking for the possibilities for developing clusters of unorganized recyclers all over India to work collectively towards e-waste management. The association is also in touch with similar foreign councils to share knowledge about sustainable goods and services.

Mr. Mehta ranked the below mentioned five states as the states which are aggressively promoting the growth of sustainable goods and services:

RANKS 1 2 3

STATES KARNATAKA MAHARASTRA DELHI

Commenting on the achievements and scope of improvement Mr. Mehta said There is ample scope of developing sustainable exports in India. We conducted the first-of-its-kind study to inventories e-waste in the country. However there certain areas which need immediate

attention. India doesnt have a formal e-waste processing sector. There are no organized players. There are only 2 functional recyclers in India. Benchmarking of the environmental criteria is also required

53

so that company can know the minimum which is expected from them.

54

PROJECT EXPORTS PROMOTION COUNCIL

Project Exports is a reflection of the technological capabilities of a country. It can be divided into four broad categories as: Civil Construction. Turnkey Modules. Consultancy Services. Supplies, primarily of capital goods and industrial manufactures.

Project Exports Promotion Council was formed in the year 1984 with a vision to promote project exports in engineering construction projects, turnkey engineering projects and consultancy & other engineering services from India. The council provides necessary technical information, guidance and support to Indian construction and process engineering contractors and consultants in public or private sector to set up overseas projects. The target market of India revolves mainly around Asia-Pacific Region and South East Asia.

The sectoral composition of the project exports is shown in figure as follows:

% Composition of Project Exports

(Source: EXIM

Presentation FICCI

on
22%

Bank,

Banking Kolkata,
Civil Construction Power Generation
4% 26%

Conclave, 21/07/2006)

Power Transmission
32%

Commenting

on

the

growth
16%

trend of sustainable goods and services in engineering sector

Consultancy Services Others

SOURCE PEPC website. : www.projectexports.com

55

Mr. K. Bhushan said Indian companies have shown capabilities to secure contracts in India at international conditions but they have not been able to replicate this show in the international market. The growth trend is positive in the domestic market but same cannot be commented for overseas market.

Project Exports Promotion Council (PEPC) mainly acts as an overseas construction council of India to help establish projects outside. It is not involved in rewarding the companies in any ways. Moreover environmental norms are mandatory while taking projects in foreign land. The respondent was also unable to comment on the benefits provided by the Government to the companies which adhere to environmental norms. PEPC do provide information about various sustainable opportunities in foreign markets to the companies. The council does not fund any researches by the company to find energy efficient solutions but do encourage companies to work collectively towards finding energy efficient solutions. The council is also in touch with similar foreign councils to share knowledge about sustainable goods and services.

According to Mr. Bhushan ranking the states is not within the purview of PEPC and so they do not evaluate different states with any ranking system.

Commenting on the achievements and scope of improvement Mr. Bhushan said There is ample scope for India to become a leader in project management across the nations. There is no dearth of brain in India. Only a systematic approach with long term goals is what is needed. Few steps were recommended by him. He commented that SAARC countries need to be targeted. Small companies should be Joint Venturing with the big giants to be able to participate in the Mega projects. Also scope of improvement is there in BOT mechanism (Build Operate and Transfer).

56

SOCIETY OF INDIAN MANUFACTURERS (SIAM)

57

Society of Indian Automobile Manufacturers (SIAM) is the apex Industry body representing 38 leading vehicle and vehicular engine manufacturers in India. SIAM is an important channel of communication for the Automobile Industry with the Government, National and International organizations. The Society works closely withy all the concerned stake holders and actively participates in formulation of rules, regulations and policies related to the Automobile Industry.

In the words of the respondent, K.K.Gandhi, The growth trend of sustainable goods & services in automobile manufacturing industry is very encouraging. The figure below substantiates the statement given by Mr. Gandhi. According to the figure, over the years exports percentage out of the total production of automobile vehicles is increasing. The trend line in the diagram explains the future situation and the R2 value proves its authenticity with 97% confidence.

Export (no. of vehicles) as a percentage of Total Production (no. of vehicles) in the Automobile Sector in India

Export as a percentage of Total Production

10 9 8 7 6 5 4 3 2 1 0 2000 2001 2002 2003

y = 1.122x - 2241. R = 0.974

2004

2005

2006

2007

Time Scale

Export as a percentage of vehicle Linear (Export as a percentage of vehicle)

58

The automobile companies do not receive any monitory assistance from the Govt. on the environment frontier. They just follow the environment norms as mandatory and to some extent as market driven incentives. Moreover there are no special incentives for the companies having ISO 14001.

Central Motor Vehicles rules 1989- Technical Standing Committee (CMVRTSC) have its representatives from SIAM. The committee advises The Ministry of Shipping, Road Transport & Highways (MoSRT&H) on various technical aspects related to CMVR. SIAM in turn delivers the required information to its member companies. Along with that they also update the industry players about foreign rules like various agreements issued by United Nations Economic Commission for Europe (UNECE) regulations.

The companies put serious effort to make their products at par with the world standard. Hence they have to make significant investment in the research and development. It is worth mentioning in this regard that the companies who invest sincerely in the R & D get monitory benefits from the Govt. and SIAM being a part of CMVR-TSC also put their voice in this issue.

The association makes various moves to prove themselves as a pro-active organization in organizing and attending environment related seminars and programme. Hence they can make the companies aware about environment related information. The various programmes can be summarized as follows:

SIAM Annual Convention 2007: Implementing Automotive Mission Plan 2006-16 - Ensuring Sustainable Growth is this years them for the annual convention of the Society of Indian Automobile Manufacturers

SAFE Annual Convention 2007: It is an initiative from the central and the state governments. Private sector and non-government organization to translate into reality the theme for the convention Riding the Roads: To a Safer and Greener Tomorrow. The objective of the seminar is to

59

bring the experts, policy maker and all the stakeholders to exchange best practices. NATIONAL REAL ESTATE DEVELOPMENT COUNCIL (NAREDCO)

60

National Real Estate Development Council (NAREDCO) is an apex self regulatory body of real estate and allied sectors. It was established in the year 1998 under the tutelage of Union Ministry of Housing & Urban Poverty Alleviation.

Brigadier Singh (Senior Executive-Environment) from NAREDCO representing their industry stated that the real estate sector has recorded a sustained growth in the last few years owing to a surging economy and heavy inflows of FDI into Indian Real Estate market. The major players in this sector have to follow certain environment specific norms for getting investments for their projects. According to him since the industry has shown incredible growth in the last couple of years and is now in public focus so the companies are taking extra care in following all the norms.

According to the respondent the Govt. of India do provide tax subsidy to companies under Section 80-IA. The council does not provide incentives to the companies but do take on issues concerning the sector with the relevant ministry. Moreover the required environmental standards need to be followed by the companies to operate in the market.

The council is very pro-active in developing the sector into a contributing sector towards the development of Indian economy. For this they organize seminars, exhibitions, conventions and publish journals in this regard. They also provide information about various opportunities to the member companies. The council is also carrying out a project along with CRISIL to rate real estate developers and projects. The association takes these types of initiatives to make its member companies more informative about various related issues. Also the council exchange information with similar councils from Serbia, Dubai etc.

61

It can be mentioned that NAREDCO is also associated with the project of Green Building. The Green Building value chain is shown in the figure as:

(Source: www.greenbusinesscentre.com)

The performance of NAREDCO in making the members and other similar organization is worth mentioning. NAREDCO collectively with BAI (Builders Association of India) and ICCTAS (Indian Council of Ceramic Tiles & Sanitary ware) conducted an exhibition on A good home idea.******

The state wise performance in the context of export of sustainable goods and services can be ranked as follows:

SOURCE ****** www.naredco.org

62

STATE Delhi Uttar Pradesh Haryana Karnataka Tamil Nadu Andhra Pradesh Gujarat Maharashtra

RANKING

2 1 3

Commenting on the achievements and scope of improvement Brig. Singh said Many developments have taken place in the recent years. Use of various hazardous materials are now restricted. But a lot need to be done in the future. Parameters need to be laid down and their implementation process should be reviewed on a regular basis so that the measures are successful. INDIAN MACHINE TOOL MANUFACTURERS ASSOCIATION (IMTMA)

63

IMTMA is an apex body of the machine tool industry. It was established half the century ago with the motive of promotional activity for the industry. At present it represent over 300 companies from both, the public and private sectors, manufacturing a wide range of metal-cutting and metal-forming machines, cutting tools, accessories and other ancillary equipments.

Mr. Pundle from IMTMA represents their industry as the producer of sustainable goods. It creates least amount of hazardous waste and almost every product of this industry are melted and re-used with a very minimal wastage. According to the respondent the industry is into sustainable production from the day of the start of this industry. The growth rate of this industry can be represented through the following line diagram:
Export as percentage of Total Production of the Machine Tool Industry
Export as percentage of total Production

26 24 22 20 18 16 14 12 10 8 6 4 2 0 1987

y = 6E-05x6 - 0.7068x5 + 3526.6x4 - 9E+06x3 + 1E+10x2 - 1E+13x + 4E+15 R2 = 0.7187

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Time Scale Export as percentage of total Production Poly. (Export as percentage of total Production)

The figure explains that the percentage of production which is being exported is reducing over the year. The trend line used here is the polynomial equation of order six which explains the equation up to 71%. From this equation it can be explained the changes in the percentage with the change of time up to six times.

64

According to the respondent the Govt. of India does not provide any promotion in the monitory frontier like providing tax subsidy. Moreover the environmental certifications are only a passport for greater market access. It does not help the companies in extracting any special benefit from the Govt.

The association is very pro-active to extend the status of the industry to the world standard. For this they organize national and international seminars, productivity awards ceremony, national and international exhibition and sends delegates to different nations to make themselves updated on the happenings in the other nations. We can give a glimpse of their activities: 2nd "Machine Tool Industry Summit" from 3-5 May 2007 at Intercontinental, The Grand Resort in Goa. IMTMA SIEMENS Productivity Championship Awards 2007, 23 25 August 2007. Tooltech2006, 8th International exhibition Imtex 2007, 13th Indian Machine tool Exhibition NMTS 2002: Second Exhibition of Indigenous Machine Tools & Manufacturing Solution in Bangalore from 22-26 August 2002. IMTMA Ceos Delegation To China 11-16 April, 2005

The association takes these types of initiatives to make its member companies more informative about various related issues. Another example of pro-activeness of the association if magnified from the initiatives taken by the Govt. of India to enhance the R & D Programme by offering various inhouse schemes through Dept. Of Scientific & Industrial Research, Dept. Of Science & Technology and Technology Information, Forecasting and

Assessment Council (TIFAC). The programme can be listed as follows: Home grown Technology Programme Technopreneur Promotion Programme Programme Aimed at Technological Self-reliance (PATSER) Industrial R&D Promotion Programme (IRDP)

65

The performance of IMTMA in forming the cluster cell is worth mentioning. In 1999 IMTMA in assistance of the UNIDO-CDP initiated a cluster development programme for Bangalore Machine Tool Industry. The programme was taken up with the objective to promote collaborative approach among the Machine Tool manufacturers' (MTM's), between MTM's and their Vendors, and among MTM's, their Vendors and various technical institutions, financial institutions, R & D institutions apart from other support institutions to increase the competitiveness of Machine Tool industry in Bangalore. Encouraged by this effort the association opened their own Cluster Cell in 2002 and appointed a person trained by UNIDO-CDP. The state wise performance in the context of export of sustainable goods and services can be ranked as follows: STATE Delhi Uttar Pradesh Haryana Karnataka Tamil Nadu Andhra Pradesh Gujarat Maharashtra RANKING

6 2 5 4 1 3

INDIAN STAINLESS STEEL DEVELOPMENT ASSOCIATION (ISSDA) The respondent mentioned that there are various areas that have been improved like restricting the usage of various hazardous chemicals. But the association is very sensitive in disclosing the areas of improvement.

1.Source: www.imtma.in: website for IMTMA

66

According to the Sustainability Report of the World Steel Industry 2005 steel is acclaimed as a sustainable good for its following properties:

Very High Recycled Content: Forms and Surfaces stainless steel typically has an 80% or greater overall recycled content depending on the product and application.

Extremely Long Life Cycle: Stainless Steel is so durable and corrosion resistant, products made from it last much longer than those made from other materials. This minimizes the resource utilization.

100% Recyclables: Scrap stainless steel has considerable value because it is not downgraded during the recycling process. Remelted Stainless steel scrap is of equal grade like that of the old material.

No Need for Additional Coatings: Stainless steels corrosion resistance is inherent in the metal. Using stainless steel in natural finishes can eliminate adverse environmental impacts associated with paints and solvents including off-gassing of volatile organic compounds (VOCs), paint flaking and the need for periodic recoating that add more unwanted chemicals to the environment.

Low Maintenance: Stainless steel do not requires solvents, acids, bleaches, abrasives and other harsh chemicals, which could harm the Environment, for washing.

No Corrosion Loss: The metal loss due to conventional carbon steel rusts is negligible and

100% of the original material will be available for eventual recycling.

67

The Indian Stainless Steel Development Association (ISSDA) was founded in 1989 by leading stainless steel producers in the country to develop new market sectors and applications for Stainless Steel.

Compound Annual Growth Pecentages (1980-2005) of different Metals in India

5.2 Stainless Steel 1.38 Steel without Stainless Steel 2.99 Alluminium
Metal

2.24 Zinc 2.38

Copper 1.26 Lead

0 2 4 Compound annual Growth Percentage

The stainless steel industry in India is growing at a stable rate of 12% which is very commendable when compared to the volume of competition it faces from the foreign market (particularly China and Japan) as well as from its substitutes due to the lack of consciousness among the Indians about the utility of stainless steel.

The knowledge of the effectiveness of stainless steel is taking shape in India. So the Govt. of India is making their belt tight to promote this industry. But still they are not providing any monitory incentives like giving tax subsidy to this sector. In lieu of that the govt. themselves are using stainless steel in the bus stands, metro rails and various other transport department. The main reason for their shift in stance is that they realize the various expediencies of stainless steel. Moreover they also want to exemplify

68

their effort to all the private companies to augment their interest in this regard.

The respondent from ISSDA, Ramesh R. Gopal thinks that certificates like ISO 14001 is only a gate way for the companies to increase their demand in the domestic and the foreign markets.

The Association is very active and sincere to make their member companies aware about the various sustainable issues. They conduct regular seminars to share their information with the companies. Their responsibility doesnt end over there. They also ensure that the companies are getting enough exposure in the foreign markets so that the Indian stainless steel sector can make a global presence.

The stainless steel in India is still at its nascent stage and it has lots of ground to cover. So the companies have to put serious effort to make their goods at par with the world standard. Hence they have to make significant investment in the research and development. Their association (i.e. ISSDA) is also putting its hands together with the companies to improve the product quality and also extending their assistance to make this industry a significant player in the world market.

The association in its effort is also taking steps to bring the member companies on a similar platform from where they can put their strength together and pull out the most efficient solution for the industry.

The Association does its best to collate information on improving the awareness regarding the sustainable goods. They are taking sincere initiative in this issue like attending various seminars, making them updated with the inventions of various technologies and many more.

69

ISSDA is very sensitive regarding the issue of ranking the states. According to the respondent all the states are equally active in promoting the export of sustainable goods. The association feels that there is enormous scope for improvement as a lot has to be done to mould stainless steel into a matured industry in India. It is also confident that in the coming years stainless steel will become an indispensable item for various industries as well as households.

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02

INDIAN

COMPANIES

&

SUSTAINABILITY

PROCESS
2.1 INDUSTRYS OUTLOOK TOWARDS SUSTAINABILITY: ANALYSIS OF FINDINGS

SECTOR-WISE ANALYSIS Auto Component Manufacturers Construction Sector Energy Sector Finance Sector IT Sector Steel Sector

AUTO COMPONENT MANUFACTURER SECTOR

The Indian Auto component industry is going through a tough time because of the strengthening of INR against US Dollar. If the Rupee continues to gain this way it will pose a threat to the suppliers. Companies like Rico Auto which has its main base with U.S.A carmakers may find it tough in case the strengthening trend of Rupee against Dollar continues. One of the ways to minimize is

71

to increase the efficiency in the production and delivery process. In this study we interviewed 20 companies which have considerable turnover. They are:

Auto Window India Automotive Stampings & Components Bajaj Motors Bharat Forge Bharat Gears Continental Engines Ltd. Lumax Industries Mark Auto Industries(Now Sikh Metals) Bajaj Auto Ltd. Kinetic Engineering Ltd. Mahindra& Mahindra Ltd. Minda Corporations Ltd. Anand Motors Pvt. Ltd. Rico Auto Industries Sona Group (Sona Koyo) Spicer India Ltd. Munjal Showa Ltd. D.D. Industries GKN Driveline Eicher Demm

In our study of 20 Auto and Auto Component Companies we found seven companies with significantly high turnover and export. In the following diagram we present their turnover and export. The remaining thirteen companies are significant players in different perspectives which will be clarified as we proceed with the report.

72

Turnover vis-a-vis Exports (For Auto Sector)

Amount (in Rs. Crores)

1200 1000 900 630 480 300 30

Lumax industries

700 450

360 63
Sona Koyo Rico Auto Industries Minda Corporations Ltd.

135

140

45
Mark Auto Industries

Spicer India

Turnover

Export

********************** Yes, all environmental considerations are very important for us. We are Green Partner certified company. All chemicals which are dangerous are taken care of, all solid and liquid air polluting materials are reused after being treated. For liquid we use ETP machines, for solid we use incinerator, and for air/gases we use scrubber. When we do the same 90% of dangerous material burns and 10 % remains as ash. Mr. Ajeet Pratap Singh--- Rico Auto Industries

**********************

During the study it is found that every respondent company takes environment considerations very seriously into

According

to

Anand

Motors

Pvt.

Munjal Showa Ltd.

Ltd. are

all very in

environmental important for

considerations us. We

engage

account and tries to improve upon their existing processes. The companies response to

manufacturing of rubber and rubber to metal bonded parts. We try to improve proactive environment and safety strategy in the processes. We take care of proper disposal material. and storage of hazardous

environmental

consideration

becomes

irrelevant when we compare it with

73

environment priority scaling. It can be explained with the pie-diagram which gives the percentage wise representation of the various levels of priorities. The diagram is as follows:
Environmental Priority 5%

High Priority 45% Medium Priority 50% Low Priority

The companies always put their profit priority first as the opportunity cost with respect to net profit is high when compared with environmental considerations.

It certainly affects the growth in

It was found during the study that 45% of the companies consider that environmental issues have an impact on the growth of their exports. To substantiate the claim we put the response of Mahindra & Mahindra. The remaining 50% of the respondent companies does not believe that, environmental issues have any impact on the growth of their exports.

exports

as

there

are

many

environmental issues which are to be considered in countries where exports are done.

Export Destination
Auto & Auto Components Sector

The

export

destination companies

of can

the be
20% 0%

responding

categorized into European countries (Italy, Germany, Spain), Japan,

Acquainted With

Middle East and Africa.

80%

Misconception

No Idea

74

Understanding Sustainable Goods and Services

From the study it has been found that only 20% the respondent companies in the auto and auto equipment manufacturing industry in India have a clear understanding about the sustainable goods and services. This can be substantiated from the statement the goods that can sustain for long period of time and use least energy and provide least hazard to the environment are called sustainable goods. The rest 80 % of the respondent companies do not have a clear idea about the same. The division can be represented as shown in the diagram beside. Among those 20%, 75% of the companies have shifted to the exports of sustainable goods and services; one of them is Mahindra and Mahindra Ltd. which exports Scorpio pick up. The latter is designed by taking all pollution norms of U.S.A. into consideration. 80% of the respondent companies in this sector have not yet shifted to the exports of such kind of goods and services. Hence the companies cannot specify that whether their shift in the export stance have affected their market share or bottom line.

Promotional Activities: According to the study 30% of the companies in this sector promote themselves as the proactive organization, emphasizing on growth of sustainable goods and services. M/s Mahindra & Mahindra on this regard said the company is involved in environmental initiatives like Green Bombay movement and is also involved in construction of many gardens, and some of the companies like Minda Auto Ltd. promote themselves by organizing seminars while 70% of the companies do not promote themselves as proactive organizations for the same. Certifications: Need and Benefits It has been found in the study that 75% of the companies have ISO 14001 and get benefits from this certification. M/S Kinetic Engineering in this regard said We have to satisfy all the environmental friendly norms in the

75

countries to where exports are done and to export our goods we have to be as stringent as those countries norms are. The remaining 25% of the companies said that these standards and certifications are not of great importance as quality of the products is much more important for export to various countries.

During the research, it was mentioned by 50% of the respondents that instead of introducing new norms, it is much important for the government to enforce existing norms. According to M/s Bajaj Motors Pvt. Ltd. we feel that ISO 14001 is sufficient and any other norms would be a burden for the exporter, while 40 % of the respondent companies feels that

government should take more steps and more certifications should be introduced. However, the rest 10 % of the companies are indifferent about this issue.

Budget Allocation for Environment Friendly Activities. 50% of the respondents claim environmental consideration to be of top priority. However, only 15% companies had a definite budget allocated for environment friendly activities, 35% were not allocating any budget for environment friendly activities and the rest 50% companies were reluctant to disclose the amount. The table below shows the budget allocation of the companies:

Name of the Company Bharat Forge

Budget Allocated Around Turnover 0.001% of

Amount (in Rs.) 200000

Rico Auto Industries

Around Turnover

0.003%

of

3000000

Sona Group

Around Profits

4%-5%

of

5691000

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Exposure to Different Schemes and Environmental Friendly Activities: The exposure of the responding institutions to various environmental practices is shown below:
Environmental Friendly Activities 100% 75% 75% 75% 75% 75%

Percentage

25%

Parameters

Environment Impact Assesment Environment Audit Telework Solar Power

Environment due Diligence Tele-Conferencing Energy saving Equipment

Exposure to Various Legislation: Our research reveals that 65% of the companies have only Environment Protection Certificates, 25% have all the relevant certificates while only 105 does not have any sort of certificates. Form the study it has also been found that according to 75 % of the respondent companies, government should promote FDIS for energy efficient activities to reduce CO2 and CO emissions which came out during the production process, according to Bajaj Motors Pvt. Ltd. Renewable energy is required and government should take initiative in this regard.

Model Companies in the Sector: Respondents varied on the opinion of choosing a model company in this sector. The model companies according to 50 % respondents comprised of: TATA MOTORS HERO HONDA

77

TOYOTA MOTORS BAJAJ MOTORS

While 50 % of the respondent companies did not commented on the same.

KEY FINDINGS:

Understanding of sustainability is very low in this industry as majority of the respondents (80%) do-not have a clear idea about it.

There has been a very little shift to the export of sustainable goods and services.

According to the companies the environmental norms in India are becoming stringent. So most of the companies go for environmental certifications (like ISO: 14001). Another major reason for the companies to go for environmental certifications is its increased demand in the local as well as international market.

78

CONSTRUCTION SECTOR

The construction industry is the second largest industry of the country after agriculture. It makes a significant contribution to the national economy and provides employment to large number of people. The use of various new technologies and deployment of project management strategies has made it possible to undertake projects of mega scale. The construction industry sets in motion the process of economical growth in the country; investment in this sector contributes 6.5% of Gross Domestic Product (GDP) growth. Every rupee invested in the construction industry causes a Rs.0.80 increment in. GDP as against Rs.0.20 and Rs.0.14 in the fields of agriculture and manufacturing industry, respectively.

Construction and construction consultancy is a prospective industry when it comes to the consideration of export of sustainable goods and services. The chapter is based on five significant players in construction industry namely: Jai Krishna Arctec Hindustan Construction Ltd. Gammon India Ltd. CH2MHILL Pvt. Ltd. DLF

Source: Challenges before Construction Industry in India Arghadeep Laskar and C. V. R. Murty Department of Civil Engineering, Indian Institute of Technology Kanpur 79

The performance of these companies is represented through their turnovers and export performance:

Turnover vis-a-vis Export (in crores)

Turnover vis-a-vis Export (in crores) in Construction Inustries 5000

2000 1000 125

Hindustan Construction Co. Ltd. Gammon India Ltd.

1600 800 200

Jai Krishna Arctec CH2MHILL

40

Company

Turnover/Sales (in Crores)

Export (in crores)

The figure shows the amount of turnover of the company and their corresponding export amount exemplifying their presence in the industry.

ENVIRONMENT CONSIDERATION:

From our study, it is found that 75% of these companies are taking environmental issues seriously with special focus on energy preservation. They are using various recycling mechanisms and utilizing less energy preserving materials in their constructions. The respondents version

regarding this issue can be cited as follows;

CH2MHILL reported, The company concentrates on Target Zero approach. The Target Zero Approach can be defined as Zero Accidents. Zero Incidents. Zero Harm to People. Zero Harm to Environment.

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The initiative taken by DLF is worth mentioning: the company is adopting various mechanisms to reduce energy consumption e.g. installation of a gasbased power generation system at the Infinity Tower, Gurgaon, to utilize the waste heat for air-conditioning and saves about 25% of power. Moreover, it is also in the process of installing CFL bulb in its offices to reduce electric consumption by 15-20 watts per street light. However, not all of these representative companies are not equally concerned about their

environmental responsibility when it comes to the frontier of sustainable services.

PRIORITY SCALING OF THE ENVIRONMENTAL CONSIDERATION:

Environmental Priorities

While setting up and operating business environmental enterprise factors are

considered on high priority by 80% of the respondents. Rest of the respondents ranked

80%

High
20%

environmental consideration on medium level priority as these companies considers

0%

Medium Low

environmental factors as norms which they had to adhere.

Export Destination in this sector constitutes from major portion in Indian Neighboring Countries (INC) followed by Middle East countries, Europe and U.S.A.

UNDERSTANDING OF THE SUSTAINABLE GOODS AND SERVICES:

The focus of our study is to find out the companys understanding of the sustainable goods and services and the way by which they are catering the potentiality of export market for these goods and services.

81

In our study, we found that different companies have come up with different outlook about sustainable goods and services. It is appalling that 60% of the companies do not have any clear idea about the sustainability concept or they believe that such concepts are not applicable to their concern.

According to one of our respondents CH2MHILL: Sustainability for the company means a better management of the companys resources and a better and long-term solution for the clients problems. The company believes in providing sustainable solutions in every project that it undertake. Another respondent DLF have a different view about the above concept. To put it in the words of the company: The goods that require minimum resources and generate least amount of wastages using locally available raw materials are called sustainable goods.

Reason for shifting towards export of sustainable goods and services and its corresponding effect: The industry as such is not much aware of sustainability or they believe that it is not applicable to their industry. Hence, none of them has started exporting such services to the foreign countries. From such response of the companies, we can draw a conclusion that it has not affected the market share and the bottom line.

PROMOTIONAL ACTIVITIES: Only 40% of the respondent said that they do some promotional activities on various fronts to show their environment consciousness is an important responsibility for their concern. CH2MHILL publishes a World Sustainability Report every year in the name of A World of Ingenuity. Along with that, they also perform Community Outreach Programme through which they try to develop environment consciousness among the people. For carrying out this programme, they have teams like Environment Management System and Green Teams.

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In this phase of globalization one of our respondent DLF are using their website to reach every corner of world and convey the information of their environment consciousness.

Environmental certification and its corresponding effect on market demand: Majority of the construction companies does not have any environment certificates as ISO 14001 because they believe that environment certification is not a necessary for their industry. However, they hold quality certificates like ISO 9001. Even then our study have a mixed response because 40% of the company have ISO 14001 certificates. It is worth mentioning in this regard that Hindustan Construction Company Ltd. responded that they are the first company in the construction industry in India to be certified for ISO 9001, ISO 14001 and OHSAS 18001 for its Quality, Environmental System. Various companies responded that environment certification does not have much of its effect on the demand market. It is only the case of Lowest Bid that matters in the end. Beside this it is also worth mentioning that Gammon India Ltd. have responded that they carry out all project in joint ventures with foreign companies and the foreign counterpart take responsibility of all the environmental norms in their country. and Occupational Health & Safety Management

Environment budget: According to the in depth interviews with the companies in construction sector, there is no predefined budget for environment related activities; companies allocate their budget according to the project cost. Jai Krishna Arctec spend 2-3 lacs in clearance certificates for every project DLF keep 5% of their project cost for environment friendly activity.

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Environment friendly business practices:

The figure below signifies the various business practices that the company undertakes and which signifies the companies environment consciousness. The parameters can be defined as Environment Impact Assessment (EIA), Environment Due Diligence (EDD), Environment Audit (EA), Tele

Conferencing, Tele Work, Energy saving Equipment and Renewable Source of Energy.
Environment Friendly Activities of the Construction companies

4.5 4 3.5 3
Values

4 3 3

4 3

2.5 2 1.5 1 0.5 0 Parameters

Environment Impact Assesment Environment Audit Telework Solar Power

Environment due Diligence Tele-Conferencing Energy saving Equipment

LIST OF CERTIFICATION: The company certificates are listed below in the following way: Hindustan Construction Company Ltd. has Corporate Social

Responsibility (CSR) and ISO14001 certificate CH2MHILL Pvt. Ltd. has CSR, ISO14001 and CE Mark

Response to the judicial decision and environmental legislation: According to our study almost all the companies are very serious about all the norms and legislation and comply with them religiously. Apart from the

84

normal Air, Water and Environment Act. Hindustan Construction Co. Ltd. also follows BOCW 1996, IEA, IE Roles, Workmen Compensation, Company Labor compensation, Environmental, social legislation.

Level of seriousness towards environmental laws: Our study reveals that 80% of the company just complies with the environmental laws and the remaining 20% exceed above the legislative standards. Our study reveals that 80% of the construction companies need assistance from the govt. to promote FDI for invention of new techniques so that the level of CO2 and CO can be reduced and reusage of the resources can be made a more common phenomenon.

MODEL COMPANIES: The model companies as mentioned by some of our respondents are given below: The model company for Hindustan Construction Co. Ltd. is in USA namely Bechtel Co. The model companies for Gammon India Pvt. Ltd. are L&T (efficiency in operations), Patel Engineering

KEY FINDINGS:

Although 80% of the companies give high priority to environment consideration but only 40% of the companies have proper

understanding of the concept. The others believe that it is not applicable to their industry. Strikingly none of them have shifted to the export of such goods. The concept of Green Building is very new in India and the companies started thinking in such line.

85

ENERGY EQUIPMENT MANUFACTURER SECTOR

In the due course of the study five companies has been taken from energy equipment manufacturer industry namely Triveni Engineering & Industries Ltd Moser Baer Insta power Enercon India pvt. Ltd. Suzlon Energy

The turnover and the percentages of exports of these companies are shown in the following figure:

Turnover & Exports (in Rs. crores)

5,380

2,000 2000

1,896 228

2,200

2152

5 Enercon Energy

1 Suzlon Energy ltd

Moser Baer Triveni Engg. Pvt. Ltd

Insta Power exports

turnover

Almost all companies in energy sector which were under the purview of study gives high priority to environmental norms in their respective production processes.

86

****************** We have many projects going on which aims to save energy & undertake researches so that we can use more of renewable & nonpolluting energy. Last year we have saved 2.3 MW & saved around 14000 tones CO2 emission. We have developed a new product called Vertical Silicon Module which uses solar energy to generate

electricity. Mr. Prakash Bhardwaj Moser Baer *******************

There was mix reaction from the companies in terms of the benefits from taking environmental considerations into account. M/s Triveni Engineering

pvt. Ltd. said Environmental considerations have a huge impact on the growth prospect of bottom line as a whole and exports in particular. 25%30% CAGR have taken place in the last fiscal year, while there were few who does not find any benefit in terms of growth of exports taking environmental considerations into account.

Environment as an important factor while setting up and operating a business enterprise:

Environmental considerations
20% 40%

The environmental considerations while setting up and operating their business enterprise are high as 2/5th of the companies agree to the fact that environmental considerations may override

High Meduim Low

40%

commercial considerations. There were companies like Suzlon

Energy and Enercon Energy who believes that environmental factors and

87

impact will be considered but finally the commercial viability will prevail, while 1/5th of the companies puts low level priority while setting up and operating their business enterprise i.e. for them environmental factors or impact will not be considered in setting up or operating your enterprisedecisions will be based on commercial considerations alone.

Export Destinations

From the study it has been found that different companies exports to different countries which include European countries (Italy, Germany, Spain), Japan, Middle East and Africa.

SUSTAINABLE GOODS AND SERVICES - AN UNDERSTANDING

From the study it has been found that the understanding of sustainable goods and services by 60% of the companies in the energy equipment manufacturer industry in India are same and can be written as Goods and services that have long term viability & are produced without harming the environment or society at all levels of production effects are basically sustainable goods, and rest 40% of the companies does not have a clear idea about the same. Out of the companies that are aware of the concept 2/3 rd of these companies ended up in shifting their business to exports of sustainable goods and services. From the study it has been found that 75% of the companies have not yet shifted to the exports of sustainable goods and services. The companies that have shifted to the export of sustainable goods and services has increased their market share and bottom line, according to m/s Triveni Engineering and Industries Ltd The company emphasize on quality which helps it to regain its clients for a long term basis thus increasing its market share on a continuous basis as it has a very strong base of long term clients. According to insights received from industry experts the companies that are proactive in sustainable goods will enter export market whenever the production capacity increases.

88

Emphasis on Growth of Sustainable Goods and Services According to the study 40 % of the companies in this sector promote themselves as the proactive organization, emphasizing on growth of sustainable goods and services. M/s Moser Baer on this regard said We promote ourselves an organization which is proactively working towards a better environment & have partnered UNDP for various environment related projects. That surely adds to our Brand value & Goodwill.

Do Eco Friendly Norms or Certification Benefits The Company Companies that are proactive against sustainable goods consider it to be a competitive edge over there competitors. Majority of the companies follow We get the benefits of posing such environment friendly certifications in terms getting of a getting export orders, over the norms or opt for certification because it is a norm in US and EU markets to trade i.e. 75 % of the respondent companies said that they have to take certifications like ISO 14001, ISO 9001, OHSAS 18001 for exporting their products. According to them there are no benefits attached to it. --M/s Moser Baer-It has been found that companies find government already taking necessary actions like certification and norms to be followed by the companies and there is no need to take further steps to develop and market such schemes. According to m/s Triveni Engineering & industries ltd. ISO certification is sufficient for energy equipment sector industries because the

competitive

edge

other competitors & easy market access for producing eco-friendly

products

products of this sector do not directly affect the public as a whole. However, 25 % of the companies feel that there is a need for more certifications for environmental care in this industry and government should take initiatives in this regard. According to them rather laying down more

89

norms or certifications the enforcement of existing norms should be made more stringent.

Budget allocation for environment friendly activities. The budget allocation was found to be minimal. Apart from Moser Baer who allocated 50 60 lakhs into such activities, many companies felt reluctant to share the figures. There were companies which even said that the amount is not yet decided.

Environment Friendly Business Activities Done In the Companies In The Energy Equipment Manufacturer Industry

Environment Friendly Activities

75% 75% 75% 75%

100% 75%

25%

Teleconferencing

Environmental audit

Tele-work

Environmental due diligence

Energy saving equipment

It has been found in the study that all of the respondent companies in the energy equipment manufacturer industry comply with applicable

environmental laws and judicial decisions and strictly follow all the acts and legislations in force with regards to environment.

From the study it has also been found that according to 75 % of the respondent companies, government should promote FDIS for energy efficient activities like to reduce CO2 and CO emissions which comes out

Environmental impact Assessment

90

solar power

during the production process of energy equipment products, according to M/s. Triveni Engineering % Industries Ltd. The government should increase investments to promote use of renewable energy sources by the industries. Presently lot of incentives like tax benefits, subsidies etc are given by the government to promote this cause. But there is a greater need for promotional programs to increase the awareness

level of various industries on the benefits of using renewable source of energy. while according to 25 % of the respondents there is no need of FDIS for such activities and the rest 25 % is indifferent in this issue.

Model Companies in Energy Equipment Manufacturer Industry.

IREDA Ltd. (Indian renewable energy development agency Ltd.). TATA BHEL and SUZLON Energy.

KEY FINDINGS:

The general consciousness about sustainable goods and services is very high. 60% of the companies defined it in the right track. Among them 2/3rd of the companies have shifted to the export of such goods and have got benefit from it.

75 % of the respondent companies said that they have to take certifications like ISO 14001, ISO 9001, OHSAS 18001 for exporting their products. According to them there are no benefits attached to it.

Companies

feel

that

Governments

list

of

certifications

on

environment is sufficient and they only need to supervise its applications. But they felt the need of FDI for the betterment of society, economy and environment.

91

FINANCE SECTOR

The health of the financial sector is one of the major indicators of the growth potential of an economy. This sector plays a crucial role in the growth of any industry. Presently Indian financial sector is in a process of rapid

transformation. The Indian financial sector has grown at about 15% in the last couple of years and has shown stability to sustain that growth in-spite of the crisis in other Asian markets. In recent years this sector has kept pace with the growing needs of corporate and other borrowers. The study on this sector was done to reveal the interest of financial sector in the growth of investments in sustainable goods and services taking environment into consideration. In this study we interviewed five of the major financial institutions in India. They were: State Bank of India (SBI) Industrial Development Bank of India (IDBI) Rabo India Finance Ltd. Asian Development Bank (ADB) Axis Bank.

The turnover of the representative companies ranged from Rs.663 Crore to Rs.45260 Crore. The graph shows the approximate present turnover of the five representative financial institutions present in India.

http://meaindia.nic.in/indiapublication/Financialsector.htm

92

Turnover of Respondent Banks

Turnover (in cr.)

However special

as

45260

reference

the case of Asian Development Bank

7373

can be looked at. The Development takes grants Asian Bank and
SBI IDBI Banks

4800

660 Axis

Rabo

loans and invests the amount in the development of economy of poor countries. Thus ADB is more of an association of member countries rather than any other commercial financial establishment.

The loan approved by ADB in the year 2006 (as per annual report 2006 of ADB) is given as follows: $7.4 billion approved for 80 loans for 67 projects. $260.5 million approved for 14 equity investments. $124.8 million approved for 3 guarantees. $530.0 million approved for 5 syndication operations. $538.4 million approved for 43 grants. $241.6 million approved for 260 technical assistance activities. $3.8 billion approved for 8 multi-tranche financing facilities.

During the research we found that around 80% the respondent companies takes environmental issues seriously but none of them consider that environmental considerations had any major impact on their market share. As per the respondent companies the need for considering environmental issues is slowly becoming mandatory for the financial institutions before investing in any project. Majority of the respondents (80%) showed their interest in investing in the developed countries of European Union and U.S.A. Other important destinations include South East Asia and Middle East. Generally all the norms and certifications that are to be followed are

93

required to be seen at while financing projects in the concerned countries and the specified RBI norms.

The level of priority given to environmental considerations in case of these respondent financial giants is shown in the pie-chart as: Environmental Consideration Around 40% of the responding companies give high level of priority
40% 40%
High Priority Medium Priority

to

environmental

considerations from cradle to grave of the process and 20% gives medium level of priority to considerations. see that to environmental However 40% we of

20%
Low Priority

around the

financial

institutions

give

low

level

priority

environmental

considerations. The financial institutions (like State Bank of India) still look at the commercial viability of the project and the capacity of the company to carry out the project perfectly before providing that company with finance.

Understanding Sustainable Goods and Services During the research 40% of the respondent companies showed
20% 40%
Acquainted With Misconception

Finance Sector

understanding of sustainable goods and services and the sustainability. The division is shown with the piediagram as: Asian Development Bank

showed an in-depth understanding of sustainability concept which can be

40%
No Idea

seen from their answer. Sustainability defines the characteristic of any process that are productive for a very long period of time. There are

94

other things like economic development, judicious use of available resources etc.

Shift to the Export of Sustainable Goods and Services During the course of study it was found that out of the respondent companies only Asian Development Bank shifted to the export of sustainable goods and services from around 1995 and the rest had not yet shown any initiative to shift into the export of sustainable goods and services. The main reason for the shift by Asian Development Bank was to promote the concept of sustainable goods and services among all its member countries and also eradication of poverty as overall development in the member countries.

As per the research only 40% of the companies considered them as a proactive organization which emphasized on the growth of sustainable goods and services and every second company out of these exceed the compliance norms and standards on environmental laws laid by Government of India. The rest 60% respondents comply with the norms and regulations that are laid down by the Government of India.

Certifications: Need and Benefits During the course of the research it was found that all the respondent financial organizations complied with the regulations that are being laid down Reserve Bank of India and some of them look for Pollution Control Board clearance while financing any project. However Asian Development Bank specifically mentioned ISO: 14001 which the companies need to have in case of financing projects outside India. However one respondent company Rabo India Finance Ltd declared that the company carries out its own on-the-site audit to gauge the effect of the project on environment and the society and if the project is harming the environment and the society in any way then that project is not financed by the company. So it not only depends on the certification but do conduct its own audits onsite.

95

Around 40% of the respondents accede to the fact that government needs to take initiative to develop indigenous certification process for the sector.

The respondent companies in this sector were not able to give any input regarding any budget that they set aside in a financial year for environmental friendly activities.

Exposure to Different Schemes and Environmental Friendly Activities

The exposure of the responding institutions to various environmental practices is given in the figure as: % of Companies Exposed to Various Environmental Activities
80%
% of Companies

80% 60% 60% 40% 20%

40%

Tele-work

VOIP

Acq. New Premises

Environmental Activities

From the graph it can be seen that the financial institutions are increasing the use of new technologies to improve their work efficiency and reduce the use of energy. However the pace of change is very slow compared to the developed economies of the world.

96

Use of Solar Power

While setting unit

Env. Friendly Equipment

Env. Audit

Similarly the exposure to various certifications and schemes is given in the figure as: 60% of the responding companies have exposed themselves to CSR schemes. 20% of the responding companies adhere to ISO: 14001. 20% of the responding companies have come across GEF funding facility. 40% of the respondent companies are exposed to carbon trading. 20% of the respondent companies follow Equator Principles.

Model Companies in the Sector

Respondents varied on the opinion of choosing a model company in this sector. Asian Development Bank considered World Bank as their model institution. IDBI and Calyon Bank was also considered as model companies by State Bank of India and Axis Bank respectively.

The respondents considered more environmental initiatives by government as well as big corporate houses a must for increasing the awareness level of all the industries regarding environmental issues.

KEY FINDINGS: The concept of sustainable goods and services is not very prevalent in this sector because only 40% of our respondent companies

understand its meaning. Among them 80%have shifted to the export of such goods. The institutions believe that they do not need any environmental norms. They only follow the regulations set by Reserve Bank of India. The institution while financing the companies seriously considers the ill effect of the project to the environment. They finance only those projects that take proper actions against environment hazards.

97

From a generalist's perspective, one of the biggest achievements of the IT sector in the country as FY 2006-07 went by was that it started regaining its losing image as a role model for the country. The table shows the key highlights of IT sector performance over the years.

USD billion IT Services -Exports -Domestic ITES-BPO -Exports -Domestic Engineering Services and R&D, Software Products -Exports -Domestic
Total Software and Services Revenues
Of which, exports are

FY 2004 F 10.4 7.3 3.1 3.4 3.1 0.3 2.9

FY 2005 13.5 10.0 3.5 5.2 4.6 0.6 3.9

FY 2006 17.8 13.3 4.5 7.2 6.3 0.9 5.3

FY 2007E 23.7 18.1 5.6 9.5 8.3 1.2 6.5

2.5 0.4 16.7 12.9

3.1 0.8 22.6 17.7

4.0 1.3 30.3 23.6

4.9 1.6 39.7 31.3

5.0 Hardware Total IT Industry (including Hardware) 21.6

5.9 28.4

7.0 37.4

8.2 47.8

98

There are lots of other positive sides from which we can identify the industry as the most promising sector. In short the various encouraging insights of this industry can be listed as follows: IT was the biggest employment generator in the country. MNC investment in Indian IT industry has increased manifold and more is expected in the near future. The biggest indicator of the growing global confidence in India comes from the fact that after China, India is the biggest destination for IT companies. This report gives an overview of this industrys understanding of

sustainability and the advantages that the companies are getting in exporting sustainable goods and services. The responses of the 30 significant IT players were taken during the study. They are: Tata Consultancy Service Streamnet India Pvt. Ltd. Satyam Venture Engineering Service Pvt. Ltd. Sarvam Solutions Raltes Technology Computer Factory Norman India Pvt. Ltd. Karuturi Networks Ltd. LGS Ltd. Inlogic Biz Pvt. Ltd. Infotech Enterprise Huawei Technologies India Pvt Ltd HCL Technologies Ltd Gantec Solutions Pvt(i) Ltd Dhruva Infotech (P) Ltd Cranes Software International Limited Cosmonet Solutions Pvt. Ltd. CG-Core El Programmable Solutions Pvt. Ltd

99

 BP Infotek Pvt.Ltd Boston Consulting Group Birla Soft Solution B2B Software Solution. Atrie Technology Pvt Ltd Aspire Systems (India) Pvt. Ltd. Arn Systems Ansata Computer Systems Pvt. Ltd. Allied Electronics and Magnetics Ltd (AMKETTE) Adroit Claretdene Infotech Pvt. Ltd. Adlink Technologies Inc The turnover and the percentages of exports of these companies are shown in the following graph:
Turnover vis-a-vis Export amount (in crores)

Turnover vis-a-vis Export amount (in crores) of the IT companies

250 200 147 147 71 40 14 0.784
Adlink Products Adroit Infotech

200 198

100 75 25 14 5 12.6
Birla Soft B2B Software

80

80

18

14

HCL-BPO

Karuturi Networks

Aspire Systems

LGS Ltd.

Turnover/Sales (in rs. Cr.)

Export (in crore)

The response of the 30 companies on the IT Sector gave a mixed response that can be summarized under three categories: I. 39% of the respondents said that environment considerations play an important role in their concerns. The above statement is substantiated from these lines

100

Huawei Technologies

Satyam-Venture

***************** Yes, we are much bothered on environmental considerations as we are using lot of computer systems and telecom equipments, we have to make sure that it does not create any hazards to our employees and also to the environment when our equipments are disposed in the future. Our first importance is our employees health and safe work environment.
Siddhartha Shankar (HCL Technologies)

****************** II. 21% of the companies said that software development is a nonhazardous production process and the companies do not require any specific policy to combat pollution. The avowal above can be confirmed from the statement from Inlogic Biz Pvt. Ltd.: No, we are into services industry and we do not think that we require any legal/statutory requirements to adopt for environment related process here. III. 18% of the companies look into the matter as mandatory because their clients want them to maintain the environment norms. The companies put different priority levels to environment. We present their priority listing in the form of pie diagram:
Importance of Environmental Issues rated on priority basis by IT Companies

30% 40% High 30% Medium Low

101

Export Destinations: From the study it has been found that U.S.A. and Western European countries like U.K., Germany, Belgium, and Portugal are the major export destinations of Indian IT companies. The other important destinations include Australian region and ASEAN countries.

SUSTAINABLE GOODS AND SERVICES - AN UNDERSTANDING

Understanding of Sustainable Goods & Services in the IT sector

The pie-diagrams illustrate the understanding sustainability level concept in of IT

10%

sector. We categorize their line

27%
No idea

of

understanding

within

three

groups:
63%
Acquainted with

No idea Acquainted with. Misconception

Misconception

Commenting on this HCL-Technologies respondent said Sustainability can be defined as a process of better utilization of resources keeping in mind the future considerations. IT industry is the major player in the export market. The incentives for the companies to shift to export in the context of sustainable goods and services are as follows: Profit incentives Social consciousness Improve Brand Value

30% of the companies replied that their shift to the export of such goods has not affected their market share or the bottom line and 21% responded in the positive sense. The remaining respondent were either unaware of this fact or were reluctant to response to the question.

Emphasis on Growth of Sustainable Goods and Services:

102

Only 30% of the respondent companies considered themselves as pro-active organizations in promoting the growth of sustainable goods and services. The various promotional stances taken by these companies are as follows: Promote the products as green products. Internet marketing & advertising. Aspire Systems (I) Pvt. Ltd is working with Green Peace NGO & other organizations. Cordys R&D India Pvt. Ltd. create a paperless office. HCL Technologies Ltd. has HCL-eSafe policy for raising funds.

Do Eco Friendly Norms or Certification Benefits the Company:

From our research we found that companies do not take much initiative for environment certification. It is because 57% of the respondents do not have any environment certificates and hence they cannot extract any benefits from it. The companies possessing various schemes and certifications are given in the table below:

103

CSR Scheme
Adlink Technologies. Allied Electronics and Magnetics Ltd Ansata Computer Systems Atrie Technology Pvt. Ltd B2B Software Solutions BP Infotek Pvt.Ltd Cordys CorEL Programmable Solutions Pvt. Ltd Cranes Software International Ltd. Dhruva Infotech (P) Ltd. Infotech Enterprise Inlogic Biz Pvt. Ltd. Raltes Technologies Sarvam Solutions Aspire Systems (I) Pvt. Ltd.

CE Mark
Adlink Technologies. Raltes Technologies.

ISI Mark
Aspire Systems (I) Pvt. Ltd. Boston Group. Cosmonet Solution Pvt. Ltd. Sarvam Solutions.

ISO: 14001
Aspire Systems (I) Pvt. Ltd. BP Infotech. Raltes Technologies .

GEP
Norman India Pvt. Ltd.

104

However as mentioned above the IT companies being major players in the foreign markets rather than the domestic market so they need to comply with the norms certified by the foreign markets. The list of norms followed in the foreign markets is: ISO-9001:2000 CMM Level 5, SEI SAS-70

Budget allocation for environment friendly activities: Among the 30 respondent companies few of them who have allocated the environmental budget are: Adlink Technologies Inc spends 30% of their budget on environment issues. Allied Electronics and Magnetics Ltd (AMKETTE) spend 10%-20% of CSR for environment purposes. Atrie Technology Pvt. Ltd. uses 2-3 lakhs on this issue. Dhruva Infotech (P) Ltd. has an expense of 3-4 lakhs for this purpose.

Environment Friendly Business Activities Done In the Companies in the IT Industry:

Environment Friendly Activities of the IT Companies

23

Values

12

11 6

13

13

Parameters

Environment Impact Assesment Environment Audit Telework Solar Power

Environment due Diligence Tele-Conferencing Energy saving Equipment

The legal registration is not a compliance issue for the companies. Only 18% of the respondents have Environment Protection Act out of which only Huawei Technologies (I) Pvt. Ltd. have Air Act, Water Act and Environment Protection Act. From our research it is found that all the companies just comply with the environment issues. However majority of the respondent companies do believe that government should promote FDI investment in renewable energy sector so that the energy efficient projects get a boost.

Model Companies in IT Industry:

The model companies mentioned by different companies along with the reason for choosing that company as the model one is given as follows:

COMPANY NAME Adlink Products

MODEL COMPANY Infosys

REASON It has taken many

environmental friendly campaigns

and have a very good CSR policy Adroit Claretdene Microsoft They follow the rules strictly (I) Google Their and work culture to

Infotech Pvt.Ltd Aspire Pvt. Ltd Systems

inclination

innovate B2B Solutions Boston Group Satyam, NIIT, Click-Toland BP Infotek Pvt.Ltd Infosys, Satyam They professional ----have Software Dell, Infosys, TCS They follow the rules strictly

106

approach Cosmonet Pvt. Ltd. Gantec Solutions Pvt. Microsoft, Google (I) Ltd. Huawei Technologies Wipro, TCS (I) Pvt. Ltd. Inlogic Biz Pvt. Ltd. LGS Ltd. Computer Factory TCS, Infosys TCS, CMC HCL Solutions IBM, Infosys, TCS They are the leader companies They are the leader companies They are the leader companies Leaders ------They follow the rules strictly Raltes Technologies Infosys, Oracle --------

KEY FINDINGS: Understanding of sustainable goods and services is considerably present in the IT sector with around 63% of the respondents are acquainted with this concept. However, majority of the respondents believe that since the industry is mainly into providing services so they do not cause any harm to the environment and need not be extra cautious about environmental considerations. The norms and regulations for the domestic market are not very stringent and the companies are more than happy to just follow the present norms. On the positive side companies believe that the awareness about sustainable goods and services, taking into consideration the environmental issues, need to be spread across all the industries. Government should put in more efforts to promote the concept. According to the IT associations India still is far behind the major players in hardware production. So the e-waste management concept is very limited in the industry.

107

Almost all the respondents believe that international environmental norms are much more stringent than the domestic norms and the Indian companies find it very expensive to comply with the norms. Therefore mainly the established companies enter the international markets. Accordingly the companies go for production of dual quality. The cheaper one for the domestic market and the better and expensive one for the international market (specifically for the markets of developed nations).

108

STEEL SECTOR

Steel Industry in India is at a boom because of the strong global and domestic demand. India's rapid economic growth and soaring demand by sectors like infrastructure, real estate and automobiles, at home and abroad, has put Indian steel industry on the global map. According to the latest report by International Iron and Steel Institute (IISI), India is the seventh largest steel producer in the world. But this sector is one of the major pollution emitting sectors. Hence the need of the hour is to reduce the emission level from such heavy industries. The study covered 5 major steel producing & exporting companies which include: Steel Authority of India Ltd. Monnet Ispat Ltd. Bhushan Steel & Strips Ltd. National Steel & Agro Industries Ltd. Jindal Steel & Power Ltd. The turnover of the representative companies ranged from Rs.400 crore to Rs.39400 crore and their exports ranged from around Rs.394 crore to Rs.2700 crore. The graph shows the approximate present export amount of the five representative steel giants present in India.

109

Turnover vis-a-vis Export Amount

Amount (in Rs. Cr.)

39400

10000 2700 Jindal 400 0 Monnet 2868 1720.8 2000 1200 NS&AIL 394 SAIL

Bhushan Companies

Turnover

Export Amount

It was found that almost all the respondent companies take environmental issues seriously. However it was seen that around 60% of the respondents do not agree to the fact that environmental considerations had any major impact on their exports and market share but they do believe that it has improved the brand image of the company. Majority of the respondents (80%) export their products to the developed countries of European Union and U.S.A. Other important destinations include South East Asia, Africa and islands of Japan and Korea. The certifications like ISO: 14001 are helping the companies during their exports.

Environmental Consideration
20% 40%

The chart indicates the level of priority given to

environmental considerations by the

respondent companies:
High Priority 40% Medium Priority Low Priority

Around respondent high

40%

of

the give to

companies of priority

level

environmental considerations from cradle to grave of the product and production process and another 40% gives medium level of priority to environmental considerations. But one respondent, National Steel & Agro Industries gives

110

priority to the quality of the product over the environmental considerations during and post production.

UNDERSTANDING SUSTAINABLE GOODS AND SERVICES During understanding goods and the of research 80% of the respondent companies showed

sustainable and the

20% 0%

Steel Sector

services

sustainability.

According

to

the

respondent

Acquainted With Misconception 80% No Idea

companies sustainable goods and services are those goods and services which are environment friendly in their production

process and end use and also the wastes discharged during the production process do not effect the environment adversely.

Shift to the Export of Sustainable Goods and Services During the course of study it was found that 40% of the respondent companies had shifted to the export of sustainable goods and services 10-15 years back, 40% of them have not shifted to any such exports and the rest 20% were into the export of sustainable goods and services from the year of their inception. The main reason for the shift was to generate confidence among the customers in the developed markets specifically in U.S. and Europe. But according to SAIL their shift was an initiative by their management to increase awareness about sustainable goods and services within the industry specifically and society generally. The research highlighted that only 40% of the respondent companies considered them as a proactive organization which emphasized on the growth of sustainable goods and services and out of them only 50% exceeded the compliance norms and standards on environmental laws laid by Government of India. But on the negative side we found that 20% of the respondent

111

companies agree to the fact that they do not comply with the environmental standards.

CERTIFICATIONS: NEED AND BENEFITS During the course of the research it was found that all the respondent companies are either ISO: 9001 or ISO: 9002 certified and 60% of the respondent companies are ISO: 14001 certified. Also companies like Bhushan Steel & Strips, Jindal Steel and SAIL have OSHAS, TS-16949, RoHS and ISPM certification. These certifications benefit the companies in all the international markets and are a need in U.S. and European Union markets. However according to National Steel & Agro Industries the quality of the product is the most important factor during exports. The responding companies answered negatively when enquired about whether the Government should develop indigenous certification process for the sector.

According to one respondent, National Steel & Agro Industries the existing government rules and certifications regarding environmental compliance are adequate at present.

Out of the five responding companies only SAIL could quantify the budget spent on environmental activities as 3%-4% of the total revenue which is about Rs. 1394 crores. Other companies did not have quantifiable amount that they spend on environment friendly activities.

EXPOSURE TO DIFFERENT SCHEMES 60% of the responding companies have exposed themselves to CSR schemes. 20% of the responding companies are exposed to ISI mark administered by Bureau of Indian Standards. 60% of the responding companies adhere to ISO: 14001. 40% of the respondent companies are exposed to carbon trading.

112

The

adjacent

figure

shows the percentage of respondents performing environmentally friendly activities:

Out

of

the

five

responding companies 60% are in favor of government support to FDIs in renewable energy/ energy efficiency in order to reduce CO2 and CO emissions and support companies who can provide welfare/ export opportunities with low levels of pollutions while the rest 40% thinks that extra support from government is not required as this is basics that need to be complied by the companies for long term sustainability.

MODEL COMPANIES IN THE SECTOR Majority of the respondents (around 60%) considered TATA steel and Jindal Steels & Power Ltd. as their model companies.

An important point put forward by the respondents was that all the companies in this sector play their part in complying with the environmental norms but many times it becomes difficult to comply with all the norms because that makes the production process very costly and the companies will not be able to compete in the international market.

113

KEY FINDINGS:

Most of the companies admit that it is the most hazardous industry. But they also feel that to make proper steps to stop generating hazards is not possible because that will be a costly initiative.

80% of the companies have proper understanding of the term but only 40% of them have shifted to its export.

The companies answered negatively when enquired about whether the Government should develop indigenous certification process for the sector.

114

2.2 INDUSTRYS OUTLOOK TOWARDS SUSTAINABILITY: CONSOLIDATED ANALYSIS OF ALL SECTORS

The whole study was done taking into consideration the samples from the six sectors and various associations and government bodies.

From the primary findings it can be commented that out of the 70 companies taken throughout the six sectors 41.4% of them gives high priority to environmental considerations while setting-up and operating the businesses, 34.3% of the total companies give medium level of priority to environmental factors and the rest 24.3% gives low level of priority to the environmental factors. This augurs well for the industry as a whole as the number of companies taking environmental considerations are increasing slowly but continuously with every passing day.

However it is being commonly accepted that the prime reasons for this shift is because the regulations have become mandatory and there is a clear-cut direction given by the government to consciously prioritize the environmental considerations. This statement is further cemented by the fact that because of these mandatory regulations construction and auto sector has also shown a considerable progress on the environmental front and is occupying the first and second rank in the present study respectively. This shows that the majority of the companies still has to be directed into taking environmental considerations and is not self directed or motivated.

The concept of sustainability is very new to the Indian market. This is evident from the fact that 48.57% of the total companies are only acquainted with the concept of sustainability or about sustainable goods and services. The remaining 51.43% either have a misconception or lack the basic idea about sustainable goods and services or about the concept of sustainability. Majority of the companies consider only environmental issues as a part of sustainability concept and do not take the whole concept of sustainability into consideration.

115

The proportion of companies understanding the sustainability concept to the proportion of companies shifting to export of sustainable goods and services can be demonstrated from the following figure:

Understanding of Sustainability Concept viz-a-viz the Shift to Exports of Sustainable Goods & Services

80%
% of Companies

63.33% 40% 20% 10% 0%

IT Auto Steel Construction Sectors
Understanding of Sustainability Shift to Exports

60% 40% 40% 40% 20% 40%

Finance

Energy

Out of the 70 sample companies only around 17% could divulge any approximate budget.

116

The exporting destinations of the respondents in six sectors were found to be mainly USA, EU, South East Asian and Middle East countries. Following picture shows the export destinations of the six sectors:

Auto Energy Construction Finance IT Steel

The proactiveness of companies in promoting sustainable development and considering environmental issues depends on how actively they encourage environment friendly practices and adhere to certain norms and schemes. This is shown in following table:

Compliance Findings to Environmental Practices and Schemes Sectors Compliance to Auto Construction Energy Finance IT a.) While setting up mfg.unit b.) When acquiring new premise c.) Annually/biannually d.) Use of VOIP e.) Use of telework f.) Purchase of environment friendly equipment g.) Use of solar power a.) Eco-mark b.) Bhagidari c.)CSR scheme d.) ISI mark e.) ISO 14001 f.) CE mark g.) FSCC h.) MSCC i.) GEF j.) CDM k.) Equator principle l.) Others *

Steel

Schemes/ Standards

Environment Friendly Business Practices

No incidence of compliance found in any company One or more incidence of compliance found in less than 10% of companies One or more incidence of compliance found in 10% to 39% of companies

One or more incidence of compliance found in 40% to 69% of companies One or more incidence of compliance found in 70% to 99% of companies Incidence of compliance found in all companies

* Others include: ISO 9000, ISO 9001-2002, OSHAS, OSHAS 18000, Green Cover, TS 16949.

From the primary study, it can be concluded that the fundamentals for social, economic and environmental development is strong in India but there is a need for proper guidance and implementation process. The companies showed consensus on the fact that government needs to adopt certain strict measures to spread awareness about environmental issues with the various sectors and the companies who are actively promoting this should be rewarded and

acknowledged adequately.

119

2.3 CASE STUDIES: MODEL COMPANIES

CONSTRUCTION SECTOR: HINDUSTAN CONSTRUCTION COMPANY (HCC) IT SECTOR: HCL TECHNOLOGIES LTD. ENERGY SECTOR: MOSER BAER FINANCE: RABO INDIAN FINANCE LTD. AUTO COMPONENT SECTOR: RICO AUTO INDUSTRIES LTD. STEEL SECTOR: STEEL AUTHORITY OF INDIA LTD. (SAIL)

HINDUSTAN CONSTRUCTION COMPANY LIMITED. (HCC)

2007 Initiative
SOURCES ARE IN USE IN THE PROJECT SITES OF JAMMU & KASHMIR.

ENVIRONMENT FRIENDLY AND RENEWABLE ENERGY

Awarded by Ministry of Environment & Forests for use of fly ash based self compacting concrete in nuclear power projects. CSR is important and considered to deliver value. We have 15% CDMS (CERs) Mr. Singh

Address: Tel.:

Hinocon House, LBS Marg, Vikroli West, Mumbai-83 044-25715758

NAME OF THE RESPONDENT

Mr. S.K. Singh (Chief Executive-Environment, Health & Safety)

RELEVANCE
Hindustan Construction Company Ltd. is one of the oldest companies in India, which was established in the year 1926. It is into the construction of

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facilities like nuclear plants, buildings, hydal projects etc. which involves huge risk to environmental stability at the project site and the company has actively executed environmental projects.

CASE SUMMARY
The case focuses on: Present Turnover and Export. Importance of Environmental Considerations. Understanding of Sustainable Goods and Services. Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share. Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out. Need for government initiatives. Model companies according to HCC Ltd.

CASE DETAILS

About The Company

Hindustan Construction Company Ltd. (HHC Ltd.) is one of the largest private sector construction companies in India which has been building large and complex structures from 1926. It also carries out projects outside India mainly in the neighboring countries of Nepal and Bhutan and some countries in Middle East.

Our major stakeholders are The immediate community. -Clients whose project we are executing. -Work force, labor and employees.

However it mainly caters to the needs of domestic market.

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Mr. Singh (Chief Executive-environment, health & safety) commented, Ours is a listed company. Our Joint venture depends from project to project. We have joint venture with foreign companies. They are Samsung & Alpine.

Our major stakeholders are The immediate community. Clients whose project we are executing. Work force, labor and employees.

The turnover of HCC has been around Rs.2000 crores in FY-2005-06. However, according to Mr. Singh the present turnover of the company has touched Rs.5000 crores. Projects outside India accounts to 20% of the total volume approximately. Around 625 projects1 have been undertaken so far by the company in the last 80 years in various fields like Nuclear and Thermal projects, Hydal Projects, Transportation projects, Industrial installations to name a few. The

fragmentation of various projects is given in figure below:

Projects carried out by HCC

Transportation

26%
Industrial Structures & Townships Marine Works

53% 9% 5% 2% 5%
Nuclear, Thermal & Gas Projects Hydal Power Water

(Source: Company Website)

1. Source: Calculated from the data available on company website.

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Importance of Environmental Considerations:

0.04% of companys budget is allocated for environment activities. CSR is strictly followed by HCC and it also has 15% CDMS (CERs)

According

to

Mr. are

Singh, very

environmental to a the

considerations enterprise. The

important follows

company

holistic

approach. In

construction sector

there is a

problem of sustainability, because project is on contract basis. The company has 0.04% of their budget allocated for the environment activities.

The company does follow CSR strictly. The company also have 15% CDMS (CERs). Mr. Singh emphasized that since long term projects of prime importance are taken up in the development of infrastructure (projects include Hydal Power Plants, Nuclear Reactor Plants, Highways etc.) in India,

environmental care is of top most importance and sometimes do override commercial considerations.

Understanding of Sustainable Goods and Services: The company has a basic understanding of sustainable goods and services but do not have an in-depth knowledge of the sustainability as such. According to Mr. Singh, the environment friendly goods which are energy efficient during production and consumption process are the sustainable goods. However, the concept of sustainability is not widespread in the construction sector. In this sector sustainability is a problem because the projects are on contract basis.

Shift to Export of Sustainable Goods and Services: According to Mr. Singh, there has not been any sudden change in the companys policy to shift to the export of sustainable goods and services. The process of improvement has been continuous.

Impact on Exports and Market Share: According to Mr. Singh, following the environmental norms are a requisite for big projects but this hasnt impacted the growth of exports or market share as

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such. According to him the real fact is that since construction sector is environmental certified, environmental issues hardly matters to the foreign client. Moreover, when it comes to doing a project abroad (Nepal, Bhutan or Middle East) it all depends on the lowest bid and the corresponding bidder.

Certifications and Recognitions: Mr. Singh considers Hindustan Hindustan Construction Company Ltd. has been a pioneer in the Indian construction sector being the first construction company to be certified with ISO: 9001, ISO: 14001 and OSHAS: 18001 certifications.

Construction Company Ltd. as a proactive organization emphasizing growth of

environment friendly activities and they have been following the norms and

regulations strictly. According to Mr. Singh Hindustan Construction Company Ltd.

has been a pioneer in the Indian construction sector being the first construction company to be certified with ISO: 9001, ISO: 14001 and OSHAS: 18001 certifications. It has also been awarded by the Ministry of Environment and Forests and the Department of Science and Technology for the use of fly ash-based self compacting concrete in nuclear power projects. It has also received award from American Concrete Institute Council for its contribution to the promotion of fly ash in concrete technology.

Companys Exposure to Various Certifications and Schemes: According to Mr. Singh, the company fully adheres to the legal and statutory requirements as per decisions taken by the Government or the Supreme Court. It adheres to Air Act, Water Act, Environmental Protection Act, Workmen Compensation, Company Labor compensation as well as BOCW 1996, IEA and IE acts. Among the certifications and schemes taken under the purview of study schemes followed by Hindustan Construction Company Ltd. are: Corporate Social Responsibility (CSR) schemes. ISO 14001 Certification by the International Standards Organization.

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He further said that the company generally complies with the applicable laws and judicial decisions but sometimes it tends to exceed environmental standards and requirements laid down by the courts.

Export Markets Where the Company Benefits from Certifications: According to Mr. Singh, the company has not come across a project in any foreign country where it has benefited due the environmental certifications that it possesses. Mr. Singh commented the reason why we could not enter the export market is that since we did not had any opportunity to work on projects abroad as it totally depends on lowest bid.

Environment Friendly Business Practices: The company encourages various environment friendly business practices. Some of them are: Environmental audit. Use of tele-conferencing for meetings (VOIP). Purchase of environmentally friendly and less energy consuming office equipment, e.g. Ozone friendly air-conditioners and energy efficient light bulbs) Use of solar power, bio-gas or other renewable sources of energy.

HCC is using the environment friendly and renewable energy sources for the project on sites of Jammu & Kashmir.

Need for Government Initiatives: Mr. Singh commented that government should take initiatives to promote Foreign Direct Investments (FDIs) in renewable sources of energy. The government should support companies which come up with energy efficient and environment friendly solutions.

Model Companies according to Hindustan Construction Company Ltd. According to Mr. Singh, Bechtel Company Ltd. is their model company as their vision statement is in-sync with the brand values of HCC ltd. which are:

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World class, Passionate commitment, Detailed Observe, Think Big.

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HCL TECHNOLOGIES LIMITED.

2007 Initiative

HCL Technologies as a part of HCL group adopted HCL-esafe policy to involve employees to reduce electrical and electronic wastes and recycle the wastes efficiently.

HCL ensures that e-waste generated from software and telecom equipments is considered and taken care of. This effort is important for safety of employees Mr. Shankar

Address:

Unit-2, Block-1, No.84, Greams Road Murugesa Naicker Office Complex, Chennai-600006

Tel.:

09962016081

NAME OF THE RESPONDENT

Mr. Siddhartha Shankar

RELEVANCE
HCL Technologies has been a leader in setting up norms for better work environment in the IT sector. Sustainability was a part of the company policy since its inception. The company is also a front runner in the field of e-waste management.

CASE SUMMARY
The case focuses on: Present Turnover and Export. Importance of Environmental Considerations. Understanding of Sustainable Goods and Services. Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share. Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out.

127

Need for government initiatives. Model companies according to HCL Technologies.

CASE DETAILS

About The Company HCL Technologies is one of the two parts of HCL enterprises operating in India. HCL was founded in the year 1976 and presently has annual revenue of US $ 4.4 billion. HCL Technologys BPO Division came into existence in the year 2000 as service provider of services like Order to Cash, Procure to Pay, Technical Help Desk, Knowledge Services, Supply Chain Management, Finance and Accounting Services and Customer Life cycle Management and more. The turnover of HCL Technologys BPO Division has been around US $ 184.1 million in FY-2006-0725. Nearly 80% of the total volume is earned from services provided outside India.

Importance of Environmental Considerations: Mr. Shankar commented that the company is quite concerned about the environmental issues. He stated HCC uses a lot of software and telecom equipments and has to take into consideration the e-waste that is generated by the company. The main consideration for the company is the safety and health of its employees. Environmental considerations are given much importance but since critical environment issues do not arise as such, commercial considerations prevail finally. The main consideration for the company is the safety and health of its employees.

SOURCE 25 www.hcl.in

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Understanding of Sustainable Goods and Services: The company possesses a good understanding of sustainable goods and services. According to Mr. Shankar sustainable development refers to, Sustainable Development is about using resources without affecting its future availability. Efficient utilization of all kind of natural

resources with proper process planning and reducing the harm on the environment due to our business activities. The resources include energy, wind, minerals, space, and even

mankind. Its about using the resources without affecting its future availability.

Shift to Export of Sustainable Goods and Services: HCC has not shifted to the export of sustainable goods and services as yet. The concept of sustainable production was incorporated in the companys policy since its inception as they believe that certain environmental considerations are important for maintaining a better work environment.

Impact on Exports and Market Share:

According to Mr. Shankar The company highlights its environmental certifications and works during public offerings and in its annual report. This creates a positive impact on the image of the company. However, the company has never scaled the impact. Countries that account to the export volume of HCL BPO are: - 65% to UK. - 25% to USA. - Rest 15% to Malaysia.

Certifications and Recognitions: HCL is a proactive organization emphasizing growth of environment friendly activities but do not deliberately promote this through campaigns. They only highlight their environmental considerations while raising funds or at the time of

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business acquisitions. Mr. Shankar said, Certifications like ISO: 14001 an OSHAS along with operation oriented certifications helps us to project as a company maintaining international standards.

Companys Exposure to Various Certifications and Schemes: HCL Technologies adhere to environment related norms of respective countries that they are operating in. HCL follows certifications and schemes like: ISO 14001 Certification by the International Standards Organization. ISI mark administered by the Bureau of Indian Standards. ISO: 9001-2000, OSHAS-18001, COPC Inc. (Customer Operations

Performance Centre Inc. HCL Technologies as a part of HCL group adopt a policy called HCL-e-safe according to which the employees are supposed to reduce/ recycle electrical and electronic wastes efficiently.

Mr. Shankar said that the company generally complies with the applicable laws and judicial decisions but do not consider itself to exceed environmental standards and requirements laid down by the courts.

Export Markets Where the Company Benefits from Certifications: The company does not directly benefits due to such environment friendly certifications in terms of getting business. All these certifications project the company uniquely in the international market.

Environment Friendly Business Practices: The company encourages various environment friendly business practices. Among the environment friendly business practices, HCL undertakes following: - Environmental impact Assessment at the time of setting up the manufacturing unit. - Environnemental due diligence. - Environnemental audit. - Use of teleconferencing for meetings (VOIP).

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Need for Government Initiatives: He was of the view that government should promote FDI, control and guide the existing Indian, corporate, foreign corporate and also the new entrants to strictly consider environmental issues. He believes that the government needs to promote an indigenous eco-marking scheme for the energy sector.

Model Companies According to Mr. Shankar, HCL has set his own parameters and do not follow any other company.

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MOSER BAER

2007 Initiative
with UNDP for numerous projects on sustainability. We have developed a new product Vertical Silicon Module considering environmental issues over commercial ones. Last year we have saved 2.3 MW & around 14000 tones CO2 emission Mr. Bharadwaj Moser Baer reserves about Rs. 50-60 lakhs for environment related activities and research.

We are Green Partner certified company. Moser Baer partners

Address: Tel.:

43B, Okhla Industrial Estate, New Delhi - 110020. 011-41635201

NAME OF THE RESPONDENT

Mr. Pradip Bharadwaj (Executive-EHS Division)

RELEVANCE

Moser Baer is one of the largest optical media manufacturers in the world and proactively undertakes researches for developing energy efficient and

sustainable products. Also Moser Baer is partnering UNDP for numerous projects on sustainability.

CASE SUMMARY
The case focuses on: Present Turnover and Export. Importance of Environmental Considerations. Understanding of Sustainable Goods and Services. Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share.

132

Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out. Need for government initiatives. Model companies according to HCC Ltd.

CASE DETAILS

About The Company Moser Baer is one of the largest optical media manufacturers in the world and has a market share of around 17.5%. It has its clients spread across 82 countries of the world. It was incorporated in the year 1983 and within 25 years of its incorporation, Moser Baer entered the top three optical media manufacturers club in the world. The turnover of Moser Baer has been around Rs.1665 crore in FY-2005-061. However, according to Mr. Bharadwaj the present turnover of the company has touched Rs.2000 crore and nearly 100% of the total volume is earned from sales outside India.

Importance of Environmental Considerations: According to Mr. Bharadwaj environmental considerations are very enterprise. He stated, important We are to the Green We are Green Partner certified company. Moser Baer partners UNDP for numerous projects on sustainability. Moser has developed Vertical Silicon Module which uses solar energy to generate electricity.

Partner certified company and we have many projects going on which aims to save energy. We also undertake

researches so that we can use more of renewable & non-polluting energy. Last

year, we have saved 2.3 MW & around 14000 tones CO2 emission. Moser Baer partners with UNDP for numerous projects on sustainability. He also informed that Moser Baer has developed a new product called Vertical Silicon Module which uses solar energy to generate electricity and can act as

133

an alternative to use of fossil fuel for generation of solar energy. Environment considerations are given prime importance and critical environment issues do override commercial considerations.

Understanding of Sustainable Goods and Services: The company possesses a good understanding of sustainable goods and services. According to Mr. Bharadwaj, sustainable goods and services are those, which do not harm the environment at any level of production & have a longer life shell.

Mr. Bharadwaj commented that producing and selling goods which do not harm the environment add to the brand value of the company.

Shift to Export of Sustainable Goods and Services: There has not been any sudden shift in the companys policy to shift to the export of sustainable goods and services. The concept of sustainable production was incorporated in the companys policy from beginning.

Impact on Exports and Market Share: Mr. Bharadwaj said, Exports of such sustainable goods like Vertical Silicon Module have a huge demand in the international market (around 4000 MW). Currently in India we are able to generate 140 mw, hence there is a big market which is untapped & we can do that which will result in profits at a very high rate. Export volume was categorized as: 60% is done to Germany. 30% to Australia. Rest is exported to Japan and other countries of the world.

1. Source: Company website

Certifications and Recognitions:

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Mr. Bharadwaj considers Moser Baer as a proactive organization emphasizing growth of environment friendly activities and quoted that Moser Baer have partnered with UNDP for various environment related project. Mr. Bharadwaj said We have following certifications- ISO- 14001, OHSAS 18001, SA8001 & we get the benefits of posing such environment friendly certifications in terms of getting export orders, getting a competitive Moser Baer is certified with ISO: 14001, SA: 8001 and OSHAS: 18001 certifications. edge over other competitors & easy market access for being producing eco-friendly products. All these are basic requirements for entering

international market.

Companys Exposure to Various Certifications and Schemes:

Moser Baer and its subsidiaries adhere to all the environment related norms in all the countries that they are operating in. Moser Baer follows: ISO 14001 Certification by the International Standards Organization. CE mark of European Union. The Clean Development mechanism or carbon trading.

Mr. Bharadwaj said that the company generally complies with the applicable laws and judicial decisions but do not consider itself to exceed environmental standards and requirements laid down by the courts.

Export Markets Where the Company Benefits from Certifications: The company benefits in the European (like, Germany) and Australian markets due to such environment friendly certifications.

Environment Friendly Business Practices: The company encourages various environment friendly business practices like: Environmental impact Assessment at the time of setting up the manufacturing unit. Environmental due diligence.

135

Environmental audit. Use of teleconferencing for meetings (VOIP). Use of tele-work for allowing employees to work from their residence.

Purchase of environmentally friendly and less energy consuming office equipment, e .g. Ozone friendly air-conditioners and energy efficient light bulbs).

Use of solar power, bio-gas or any renewable source of energy.

According to Mr. Bharadwaj about Rs. 50-60 lakhs is allotted for environment related activities & research

Need for Government Initiatives: Mr. Bharadwaj commented that Government should promote FDI. This would help India to portray that we are concerned about environment and will help us to have a greater market access.

government should promote FDI so that we can promote India as a country which is concerned about environment & which will help us to have a greater market access outside.

Model Companies according to Hindustan Construction Company Ltd. TATA is the model company for Moser Baer.

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RABO INDIA FINANCE LIMITED

2007 Initiative
site surveys to gauge the effect of any project on environment and society. If the project is harming the

Rabo India Finance Ltd. follows a very strict policy and on-

environment or the society in any way then it is not financed by the company. ISO: 14001 certification is an added advantage for companies seeking finance from us. Mr. Rai

Address: Tel.:

1-A, Janpath, New Delhi - 110001. 011-23792588

NAME OF THE RESPONDENT

Mr. Rahul Rai (Manager-Renewable Energy & Carbon Credits)

RELEVANCE

Rabo India Finance Ltd. is a non banking financial company which is a subsidiary of Rabo Bank of Netherlands. The parent company was

conceptualized for supporting sustainable development in the agricultural sector and Rabo India Finance also came up with the same vision. Rabo India Finance is targeting to become the leader in providing support to companies in the field of renewable energy and agriculture products. They have positioned themselves as a socially responsible company encouraging sustainable development taking environmental issues into consideration.

CASE SUMMARY
The case focuses on: Present Turnover and Export. Importance of Environmental Considerations.

137

Understanding of Sustainable Goods and Services. Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share. Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out. Need for government initiatives. Model companies according to HCC Ltd.

CASE DETAILS
About The Company Rabo India Finance Ltd. is a financial service provider in India and is a subsidiary of Rabo Bank-Netherlands which is among the worlds fifteenth largest financial institution in terms of Tier-1 capital. Rabo group was founded in Netherlands in year 1897. Rabo India Finance Ltd. was established in the year 1998 in a bid to enter the Indian financial market.

Rabo India Finance is targeting to become the leader in providing support to companies in the field of renewable energy and agriculture products. It has also entered into carbon credit product market and is trying to position its image as a socially responsible finance company.

Rabo India Finance Ltd. is a 100% subsidiary of Rabo Bank-Netherlands. The turnover of Rabo has been around Rs.280 crore in FY-2005-061.

Importance of Environmental Considerations:

Environmental considerations are very important to the enterprise. Mr. Rai commented that it is a mandate here to finance only the environment friendly projects and abstain from supporting any project which pollutes the environment and leads to unnecessary depletion of natural resources. Since, Rabos mother companys roots are in agriculture, it is always desirable for Rabo India

138

Finance to go for financing sustainable projects. Also the company tries to maintain a healthy balance between the economic, social and ecological effects of its business activities.

Understanding of Sustainable Goods and Services: The company has an in-depth understanding of sustainable goods and services. According to Mr. Rai, goods and services that have long term viability & are produced without harming the environment or society at all levels of production or delivery process are basically sustainable goods and the services.

Impact on Exports and Market Share: Mr. Rai says that there has been a positive impact on the market share of the company. According to him in their business, long term viability and

acceptability of the project is taken into account. Environmental issues will be one of the important considerations within the next 5 to 7 years.

Certifications and Recognitions: Mr. Rai considers Rabo India Finance Ltd. as a proactive organization emphasizing growth of environment friendly activities and they have been following the norms and regulations strictly. These are also incorporated in their CSR policy. Mr. Rai stated, Rabo India Finance Ltd. follows a very strict policy Rabo India Finance Ltd. conducts its own on-the-site survey to gauge the effect of project on environment and society and if the project is harming the environment or society then it is not financed by the company. to gauge the effect of any

project on environment and society. The company conducts its own on-site survey. If the project is harming the environment or the society in any way then it is not financed by the company. ISO: 14001 certification is an added advantage for companies seeking

finance from us.

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Companys Exposure to Various Certifications and Schemes: According to Mr. Rai the company fully adheres to the legal and statutory requirements as per decisions taken by the Government and the Reserve Bank of India. Among the certifications and schemes, Rabo India Finance Ltd. follows: Corporate Social Responsibility (CSR) schemes. The Clean Development mechanism or carbon trading. Equator Principles- A financial industry benchmark for determining, assessing and managing social & environmental risk in project financing Also Mr. Rai said that the company always tries to exceed environmental standards and requirements laid down by the courts.

Export Markets Where the Company Benefits from Certifications: Mr. Rai could not comment on the benefits definitely but apprehended that environmental issues would figure out prominently in the coming 5 to 6 years in all the industries.

Environment Friendly Business Practices: The company encourages various environment friendly business practices like: Environmental audit. Environmental impact Assessment at the time manufacturing unit. Environmental due diligence. Environmental audit or assessment annually or bi-annually. Use of teleconferencing for meetings (VOIP). Use of tele-work for allowing employees to work from their residence. Purchase of environmentally friendly and less energy consuming office equipment, e .g. Ozone friendly air-conditioners and energy efficient light bulbs) Use of solar power, bio-gas or any renewable source of energy of setting up the

According to Mr. Rai, globally 97% electricity consumed in company owned campuses is generated through wind energy.

140

Need for Government Initiatives: Mr. Rai commented that investments in renewable energy harnessing processes and energy efficient technologies are a must for the sustainable growth of the country. The future growth is very much dependent on how efficiently and effectively every country utilizes the renewable sources of energy. He stated that the nations are getting more concerned about the environmental issues. Thus, investments in renewable and energy efficient sources are an attractive business strategy for the company. He further said that if government wants to promote an indigenous eco-marking scheme for financial sector, it must make sure that the scheme becomes acceptable at the international arena also.

Model Companies according to Rabo India Finance Ltd. Mr. Rai did not suggest any company as a model company in financial sector. According to him financial sector in India is still at a very early stage and the companies have to take up environmental issues seriously for sustainable growth of the economy as a whole.

Source: Company Annual Report 2006

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RICO AUTO INDUSTRIES LIMITED

2007 Initiative
water harvesting, uses MBR (Memberance Bio Reactor) for sewage treatment in the plant. We use ETP machines for liquid, incinerator for solid, and for air/gases we use scrubber. When we don the same 90% of dangerous material burns and 10 % remains as ash. RICO is working hard on its goal of Zero Discharge. RICO has become FORD Q1 company since July 2007 Mr. Singh

A Green Partner certified company which actively pursues rain

Address: Tel.:

38 Km stone, Delhi-Jaipur Highway, Gurgaon - 122001 0124-2824000

NAME OF THE RESPONDENT

Mr. Ajit Pratap Singh (Manager-EHS Division)

RELEVANCE

Rico Auto Industries Ltd. is amongst the growing companies in auto component industry. The company has set standards in maintaining quality, efficiency and energy conservation and has been recognized nationally and internationally.

CASE SUMMARY
The case focuses on: Present Turnover and Export. Importance of Environmental Considerations. Understanding of Sustainable Goods and Services. Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share.

142

Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out. Need for government initiatives. Model companies according to SAIL.

CASE DETAILS
About The Company Rico Auto Industries Ltd. (RICO) is amongst the growing companies in auto component industry integrating services which includes design, development, tooling, casting, machining and assembling various automotive components. RICO was conceived in the year 1984 and started commercial production from the year 1986. The turnover of RICO has been around Rs.888 crore1 in FY-2006-07. Mr. Singh highlighted that around 40% of the turnover is due to exports. Some of the biggest names in passenger car market are its clients like, Ford, GM, and Jaguar, etc.

Importance of Environmental Considerations: Since Auto component industry is one of the most polluting sectors, special is attention necessary. environmental For liquid we use ETP machines, for solid we use incinerator, and for air/gases we use scrubber. When this is done 90% of dangerous material burns and 10 % remains as ash.

regarding According

environment to Mr. Singh,

considerations are an important part of the whole system and company takes care that the harmful chemicals and other polluting

particles are either reused or well disposed off. Mr. Singh stated that the company is a Green Partner Certified company and thus has to take care that its policies are environment friendly. Quoting an example he stated, For liquid we use ETP machines, for solid we use incinerator, and for air/gases we use scrubber. When this is done 90% of dangerous material burns and 10 % remains as ash.

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Understanding of Sustainable Goods and Services: Mr. Singh considers that the company does possess a considerable knowledge of sustainable goods and services and consciously operates to fulfill its environmental and social obligations. According to Mr. Singh, goods which are zero polluting and zero health hazardous can be considered as sustainable goods and services. According to Mr. Singh, the company is working hard on its goal of zero discharge.

Shift to Export of Sustainable Goods and Services: Mr. Singh stated that the company started taking environmental issues into considerations during the production and selling of goods from the time it entered the international market during year 1990-92. The reason for the shift into exports of sustainable goods and services was to remain competitive in the international market. Impact on Exports and Market Share: According to Mr. Singh companys commitment towards the environmental issues has attracted positive feedback from the international market. According to Mr. Singh, certifications like ISO: 14001, OHSAS 18001, TS 16949 have increased the foreign clientele of the company specifically in U.K. and U.S.A. Mr. Singh divulged the division of exports to these countries as: U.S.A. - 40% Great Britain - 30% Middle East - 30% 1. Source: Annual Report 2006-07 of Rico Group.

Certifications and Recognitions:

144

RICO has become FORD Q1 Company since July 2007

Mr. Singh considers Rico Auto Industries as a proactive organization emphasizing growth of environment friendly activities and promotes the same in all its marketing endeavors. According to Mr. Singh, RICO is an ISO: 14001

company and also possess OSHAS: 18001 and TS: 16949 certifications. Also RICO has become FORD Q1 company since July 2007. These certifications always lead to positive feedbacks when the company is pitching for any international projects.

Companys Exposure to Various Certifications and Schemes: According to Mr. Singh, the company fully adheres to the legal and statutory requirements and comply all the necessary Acts. Rico Auto Industries follows certifications and schemes like: Corporate Social Responsibility (CSR) schemes. ISO 14001 Certification by the International Standards Organization.

Mr. Singh said that the companies strictly comply with environmental standards and requirements lay down by the courts.

Export Markets Where the Company Benefits from Certifications: According to Mr. Singh the company has benefited from the certifications while exporting to Great Britain and U.S.A. ISO: 14001, OSHAS: 18001 and TS: 16949 certificates are mandatory for the companies to deal in markets of U.K. and U.S.A, says Mr. Singh.

Environment Friendly Business Practices: The company actively carries out various environment activities. According to Mr. Singh, annually around Rs. 30 Lakhs is spent on environment friendly activities. Rico Auto Industries follows: Environment Impact Assessment test at the time of setting up new units. Environmental company/unit. Environmental audit. due-diligence when acquiring new premises for

145

Use of tele-conferencing for meetings (VOIP). Purchase of environmentally friendly and less energy consuming office equipment, e.g. Ozone friendly air-conditioners and energy efficient light bulbs)

Mr. Singh said that the company actively pursues rain water harvesting and uses latest technology of MBR (Memberance Bio Reactor) for sewage treatment in the plant.

Need for Government Initiatives: Mr. Singh commented that government should take initiatives to promote Foreign Direct Proper checking /auditing system should be developed so that these certifications are at par with the international standards.

Investments (FDIs) in renewable

sources of

energy. He also stated that government should spread awareness about the indigenous eco-label schemes and should show proper commitment.

Proper checking/auditing system should be developed so that these certifications are at par with the international standards.

Model Companies: According to Mr. Singh, Hero Honda is their model company as it ensures that all its facilities and subsidiaries comply with the environmental laws.

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STEEL AUTHORITY OF INDIA LIMITED. (SAIL)

2007 Initiative
SAIL is making environment friendly practices mandate in production

units all over India. More than 1000 air pollution control system operate in SAIL plants. SAIL prefers environmental friendly technologies like, dry quenching of coke, coal dust reduction, establishment of wind energy saline plant etc. We prominently undertake CSR activities and try to minimize the emission of toxic residuals into the atmosphere. Around 73 projects on CO2 emission reduction are being carried out by the company. Company also conducts internal and external audits in its plants to check whether the plants are following environmental norms or not. Mr. Jain

Address: Tel.:

Ispat Bhawan, Lodhi Road, New Delhi-110003 011-22467360

NAME OF THE RESPONDENT

Mr. S.K. Jain (DGM-Environment)

RELEVANCE
Steel Authority of India Ltd. is one of the largest steel manufacturer and supplier in India which started its operation from year 1972. The company has represented Indian steel sector at various national and international forums and has a focused approach for CSR and environment related activities.

CASE SUMMARY

The case focuses on: Present Turnover and Export. Importance of Environmental Considerations. Understanding of Sustainable Goods and Services.

147

Rationale of Shift to Export of Sustainable Goods and Services. Impact of the Shift on Exports and Market Share. Relevant certificates and their assistance in exploring export market. Environment friendly business practices that are carried out. Need for government initiatives. Model companies according to SAIL.

CASE DETAILS

About The Company Steel Authority of India Ltd. (SAIL) is amongst the top ten public sector companies in India in terms of its turnover. SAIL manufactures and sells variety of steel products which include hot and cold rolled sheets and coils, galvanized sheets, railway products, plates, bars etc. The company has second largest mines network in India. Steel Authority of India Ltd. was conceived in the year 1972. Presently, SAIL is the major supplier of steel to the domestic market. The turnover of SAIL has been around Rs.4, 02,917 crore1 in FY-2006-07. However, according to Mr. Jain only 1% of the turnover is due to exports.

Importance of Environmental Considerations: According to Mr. Jain, environmental considerations are Around 73 projects on CO2 emission reduction are being carried out by the company. a priority to the company. The Company prefers environmental quenching of friendly coke, technologies coal dust like, dry

reduction,

establishment of wind energy saline plant etc. The company prominently undertakes CSR activities

and tries

to

minimize

the

emission

of

toxic

residuals

into

the

atmosphere. Employee safety and security is given prime importance by the company. Around 73 projects on CO2 emission reduction are being carried out by the company. Company also conducts internal and

148

external audits in its plants to check whether the plants are following environmental norms or not. Environmental care is of utmost importance in SAIL. More than 1000 air pollution control system in the form of ventury scrubbers, cyclones etc are operating in different SAIL plants. Every measure is taken to reduce the various forms of pollution-Air, Water, Noise and Solid Waste. However, in the process of manufacturing steel usage of latest technologies available also cannot eliminate the pollution completely.

Understanding of Sustainable Goods and Services: The company has a basic understanding of sustainable goods and services. According to Mr. Jain, goods and services which are environment friendly can be considered as sustainable goods and services. According to Mr. Jain, every big company in this sector has to take care of environmental issues to continue carrying out their operations.

Shift to Export of Sustainable Goods and Services: From the last 10-15 years, the company started taking environmental issues into consideration during the production and selling of goods. The reason for the shift into exports of sustainable goods and services was primarily the decision of the management. This is so because; the companys management wants to play an active part in promoting awareness about the conservation of environment in the society. However, the management anticipates mandatory rules and regulations on environment conservation in the future. Impact on Exports and Market Share:According to Mr. Jain, companys commitment towards the environmental issues has definitely propelled the brand image of the company but it has not affected the growth of market share as such. According to Mr. Jain, certifications like ISO: 14001 have increased the foreign clientele of the company specifically in European Union and U.S.A.
1. Source: Annual Financial Report of SAIL 2006-07 (Company Website)

149

Certifications and Recognitions: Mr. Jain considers Steel Authority of India Ltd. as a proactive growth of organization environment Steel Authority of India Ltd. is a proactive organization emphasizing growth of environment friendly activities and promotes the same in all its marketing endeavors.

emphasizing

friendly activities and promotes the same in all its marketing endeavors. According to Mr. Jain, SAIL is an ISO: 9001 and ISO:

14001 company. It also has an OSHAS certification. These certifications create a goodwill and trust among the clients for SAIL in international market.

Companys Exposure to Various Certifications and Schemes: According to Mr. Jain, the company fully adheres to the legal and statutory requirements and comply all the necessary Acts. Steel Authority of India Ltd. follows: Corporate Social Responsibility (CSR) schemes. ISO 14001 Certification by the International Standards Organization. The clean development mechanism or carbon trading.

Mr. Jain said that since the company is a leader in steel industry in India, it tends to exceed environmental standards and requirements laid down by the courts to set examples for other companies to follow.

Export Markets Where the Company Benefits from Certifications: According to Mr. Jain, the company has benefited from the certifications when exporting to countries of Europe and U.S.A. Mr. Jain commented,

certifications like ISO: 14001 and OSHAS do help in exporting to international market. Also at present there are few certifications which are mandatory for the companies to be present in the international market.

Environment Friendly Business Practices:

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The company actively carries out various environment activities. According to Mr. Jain, annually around 6%-7% of the revenue is allocated to CSR activities, out of which 3%-4% is spent on environment friendly activities. Steel Authority of India Ltd. actively practices: Environment Impact Assessment test at the time of setting up new units. Environmental company/unit. Environmental audit. Use of tele-conferencing for meetings (VOIP). Tele-work for allowing employees to work from their residence. Purchase of environmentally friendly and less energy consuming office equipment, e.g. Ozone friendly air-conditioners and energy efficient light bulbs) Use of solar power, bio-gas or other renewable sources of energy. due-diligence when acquiring new premises for

According to Mr. Jain, the management is slowly introducing environment friendly practices in all its production units all over India.

Need for Government Initiatives: Mr. Jain commented that the government is supporting companies which have come up with energy efficient and environment friendly solutions. Similar to this, government should take more initiatives to promote Foreign Direct Investments (FDIs) in renewable sources of energy. He, however, does not feel a great need for the government to promote an indigenous eco-marking scheme for the steel sector.

Model Companies: According to Mr. Jain, TATA, Jindal and Essar are their model companies but he also added that almost all the big steel companies operating in India take environmental issues into consideration.

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RECOMMENDATION AND CONCLUSIONS: CHAP 5

01 Recommendation 02 Conclusions

152

REC OM M EN DA T IO N & C O N C L US IO N S
POSSIBLE STEPS FORWARD FOR: The Companies

04

The most important step that needs to be taken is to promote the concept of sustainable good and services among the companies.

Companies need to benchmark their products at the domestic level also. It will increase their credibility as well as the quest for increasing the awareness level of sustainable goods and services within different industries.

Industry associations and industry promotion councils should consider development of sustainable goods and services to be vital and promote the members who are into the development and trade of such goods and services.

Financial companies can play an important role in increasing awareness and promoting the concept of sustainability. They should promote environment friendly projects and make it clear that company has to follow some basic environmental regulations before applying for project financing.

The Government Government should initiate the process of benchmarking the companies of every industry. The benchmarks should be in sync with the international standards. The government should supervise implementation of these norms and regulations at all levels. Innovative concepts like green building, vertical silicon module, energy conservation building code etc should be promoted by the government. The government should promote subsidies or incentives for companies who follow environment friendly factors.

153

The research shows that only 37% of the companies have a clear idea about the concept of sustainable development and sustainable good and services. The sectors like IT and Finance believe that service sector is not responsible for environmental degradation. Indias extrapolated growth of export (as a percentage of GDP) for the year 2005 is 17.19%. However, it is doubtful that how much of this export accounts to the export of sustainable goods and services, as only 25% of the respondents have shifted to the export of such goods and services.

The companies believe that production of sustainable goods and services is a kind of luxury in a country like India where competition is so high even at the grass root level. They are of the view that the environment friendly production processes are very expensive and with those processes they can hardly compete in the domestic and foreign market.

The various certifications that are issued on environmental frontier are simply considered as the benchmark to be followed. The companies acquire these certificates for commercial purposes. Proactive-ness on this ground is not very prevalent. However, the concept like Green Building is taking its shape in construction sector in India. The process of E- Waste Management in the Hardware Industry has yet to stem itself.

It is worthwhile to mention in this regard that companies need proactive-ness from the government to make the norms more stringent and uniform so that all the companies can be brought to the same platform from where they can compete with each other and deliver their best. Moreover, a possible action to protect the environment can also be adopted through such an initiative. So overall we can say that competition is playing hard against the companies proactive-ness towards production of sustainable goods and services. Although the companies are aware of the dangers of unsustainable production,

alternatives that can secure their resource and their environment are limited and expensive.

154

A p p en d i x
List of Respondents
Sect or Name of company Auto Window India Automotiv e Stampings & Componen ts Bharat forge Bharat gears Continenta l engines ltd. Lumax industries Mark auto industries( SKH metals) Bajaj Motors Kinetic Engineerin g Ltd. Mahindra& Mahindra Minda Corporatio ns Ltd. Anand Motors Pvt. Ltd. RICO AUTO INDUSTRI ES SONA KOYO City Name of respondent Mr. Narayan. P. Kini (Engineer Production) Establish ment Year Turnover/Sal es(in Rs. crores) % of expor ts

Mumbai

1972

23

11%

Mumbai Pune Mumbai Gurgao n Pune

Mr. Gaurav Vyas(Assistant manager) Mr. Chetan Mr. G.Kinarkar

1997 1966 1972

325 200 250

0.50% 45% 15%

AUTO COMPONENT MANUFACTURER

Mr.Surendar Pal Mr.Laxmikant Bhawasar

1985 1945

140 1000 3%

Gurgao n Pune

Mr.Sunil Jolly Mr.Sameer Deshpande Mr.Shankar Murkumbi Mr. Deepak

1987 1945

300 12000 16%

Pune Mumbai

1970 1945

120 18000

15% 20%

Noida Gurgao n

Dr.P.Elangovan Mr. Prosanta Burman

1958

630

10%

1978

40

70%

Gurgao n Gurgao n

Mr. Ajeet Pratap Singh MR BALINDER SINGH

1997 1987

900 1200

40% 40%

155

CONSTRUCTION

SPICER INDIA MUNJAL SHOWA LTD. D.D. INDUSTRI ES GKN DRIVELINE Hindustan Constructi on Co. Ltd. Gammon India Ltd. DLF

Pune Gurgao n New Delhi Faridab ad

MR.CHANDERSH EKAR JADE & M/S ANUSHKA LAKAM Mr. Harish Manchanda

1993

450

30%

1986

700

Mr. U .K. Gupta Mr.Prashant Tonk

1951 1986

10 300

10% 3%

Mumbai Mumbai New Delhi Gurgao n New Delhi

Mr. S.K.Singh R.L.Telang S.P.Chakrabarti Avinash S. Patwardhan Ashok Kashyap

1926 1941 1947

5000 2000 4053.3

20% 6.25% more than 50% 20%

ENERGY

CH2MHILL Jai Krishna Arctec Triveni Engineerin g& Industries Ltd. Suzlon energy Moserbaer InstaPower Ltd. Enercon Energy

1946 1992

1600 200

Delhi Mumbai Delhi Delhi

C.N. Narayanan Vibhash Dave Pradip Bharadwaj Satyajit Vaish

1930 1995 1983 1986

75.429 5380 2000 5

12% 20% 100% 20% Not Disclos ed

FINANCE

ADB IDBI Rabo Finance SBI Axis Bank Adlink Products Adroit Claretdene Infotech Pvt.ltd

Mumbai New Delhi Mumbai New Delhi Mumbai Mumbai Bangalo re

Anurag Mishra Mr.Girish Mahajan Yashpal Gupta Mr. Rahul Rai Mr. Pankaj Kumar

1994 1966 1964 1996 1806 1994 2004

2200

500000

INFORMATI ON TECHNOLOG Y

14

5.60%

Bangalo re

Arvind V.

2000

71

56.80 %

156

Amkette Ansata Computer Systems Arn Systems Aspire Systems (I) Pvt. Ltd. Atrie Technolog y Pvt. Ltd. B2B Software Solutions Birla Soft Boston Group BP Infotek Pvt.Ltd Cordys CorEL Programm able Solutions Pvt. Ltd Cosmonet Solutions Pvt. Ltd. Cranes Software Internation al Ltd. Dhruva Infotech (P) Ltd. Gantec Solutions Pvt. (I) Ltd. HCL-BPO Huawei Technologi es (I) Pvt. Ltd.

Bangalo re Bangalo re Bangalo re

1984

Vypin K. William Harsha

1989 1990 7-8

Chennai Bangalo re Hydera bad Hydera bad Hydera bad Chennai Hydera bad

Ram

1996

25

20%

Manjunath

1994

2.80%

N Bala Raju Ravi T. Chandra Nageshware Rao Jay Kumar PRK Raju

1999 1992

14 250

90% 80% Not Disclos ed 15% 80%

1988 2003 1999

164 2.2 0.8

Bangalo re Bangalo re Senthil Kumar. K

1999

7cr-9cr

2030%

80%

Bangalo re Bangalo re

1991

1997

Chennai Chennai

Kaushik Kumar Siddhartha Shankar

1992 2000 18.01 80%

Bangalo re

Vinnitha Oommen

2001

147

100%

157

Infotech Enterprise Inlogic Biz Pvt. Ltd. LGS Ltd. Karuturi Networks Ltd. Norman India Pvt. Ltd. Computer Factory Raltes Technologi es Sarvam Solutions SatyamVenture Engg.Servi ces Pvt. Ltd. Streamnet India Pvt. Ltd. Tata Consultanc y Services Jindal Steel National Steel Agro Industries Bhushan Steel Strips Ltd. Monnet Ispat Ltd. Steel Authority of India Ltd.

Hydera bad Chennai Hydera bad Bangalo re Bangalo re Bangalo re Chandrashekhar an Rakesh Kr. Patluvi

1991 2000 2000

480000 1.5 200

80% 6075% 99%

Prasanna Pai

1995

100

75%

1995 Lokesh Acharya 1989

12

Chennai Chennai

Sekar J Gurumoorthy

2000 1992

8.5 5

3545% 40%

Hydera bad Bangalo re Hydera bad Mumbai

Dr. A.M. Rao

2000

80

100%

Suresh Babu R

Niresh Verma Mr.Rajesh Singh Homiyar Wankedia

1968 1982 2877.95 13%

Mumbai New Delhi New Delhi

1985

1920

60% 36.30 % -

STEEL

Braj Kishore Jha Sheeba Choudhury

1985 1994

4202 400

New Delhi

S.K.Jain

1972

39819

1%

158

Questionnaires for Companies

WWF Project Growth in Exports of Sustainable Goods & Services Name and address of the company and Respondent:

Sector

Year of Establishment

Turnover/ Sales

% of Exports

Equity Pattern (Indian, Foreign, JV and who are the major stakeholders)

1. Are environmental considerations (such as possible pollution, use of environmentally damaging material in production, impact on surrounding flora and fauna etc.) important to your enterprise? Does the same have any impact on the growth of your exports? 2. If environmental considerations are important, what priority would you place on environmental care while setting up and operating your business enterprise? (a) (b) High level of priority at all stages, i.e. critical environmental considerations may override commercial considerations; Medium level of Priority, i.e. environmental factors and impact will be considered but finally the commercial viability will prevail. 159

(c)

Low level of priority, i.e. environmental factors or impact will not be considered in setting up or operating your enterprise-decisions will be based on commercial considerations alone.

3. Mention the list of products you are exporting? Also mention the exporting country? Product Export country

4. Which are your major export markets? Country % of Exports

5. What is your understanding about sustainable goods & services? _____________________________________________________________________ _______________________________________________________________ 6. Please discuss in detail the reasons for shifting into exports of sustainable goods and services. _____________________________________________________________________ _______________________________________________________________

160

7. Have you shifted to export of sustainable goods and services and when?
Yes No

_____________________________________________________________________ _______________________________________________________________ 8. How the exports of sustainable goods & services have impacted your market share and bottom line? _____________________________________________________________________ _______________________________________________________________ 9. Do you promote yourself as a pro-active organization, emphasizing on growth of sustainable goods and services.
Yes No

If yes, please discuss your marketing strategy for the same.

_____________________________________________________________________ _______________________________________________________________ 10. Does your exports benefits from an existing eco-label scheme or a similar environmentally friendly/sustainable certification (such as ISO 14001)? And if so, please briefly describe the scheme. _____________________________________________________________________ _______________________________________________________________ 11. In which of the export markets, your products benefit from greater market access because of their environmental performance/certifications? _____________________________________________________________________ _______________________________________________________________ 12. List down the specification/norms/certifications you have to comply for exporting to various international markets. _____________________________________________________________________ _______________________________________________________________ 161

13. Should the Government or your industry association take an initiative to develop and market an Indian eco-label or certification scheme (such as Bharat III for vehicles)? If yes, what should be those initiatives?
Yes No

14. Is there any specific budget allocated for environment friendly activities? Give details. _____________________________________________________________________ _______________________________________________________________ 15. Does your enterprise encourage any of the following environmentally-friendly business practices? (a) (b) (c) (d) (e) (f) (g) Environmental impact Assessment at the time of setting up the manufacturing unit, if any? Environmental due diligence when acquiring a new premise or company/unit? Environmental audit or assessment annually or bi-annually. Use of teleconferencing for meetings (VOIP) Use of tele-work for allowing employees to work from their residence. Purchase of environmentally friendly and less energy consuming office equipment, e .g. Ozone friendly air-conditioners and energy efficient light bulbs) Use of solar power, bio-gas or any renewable source of energy.

16. Has your enterprise been exposed to (or adhere to) any of the following: (a) (b) (c) (d) (e) (f) (g) Eco-Mark introduced by the Government of India. Bhagidaari Scheme introduced by the Government of Delhi Corporate Social Responsibility (CSR) schemes ISI Mark administered by the Bureau of Indian Standards ISO 14001 Certification by the International Standards Organization CE mark of European Union Forest Stewardship Council certification (for wood & wood based products)

162

(h) (i) (j) (k)

Marine Stewardship Council certification (for marine products) administered by the World Wildlife Fund and Unilever. The Global Environmental Facility (GEF) funding facility. The Clean Development mechanism or carbon trading. Any other_______________________

17. Which of the legal and statutory requirements required under local or national

environmental legislation and judicial decisions (Air Act, Water Act, Environmental
Protection Act, decisions of the Supreme Court of India) are followed by your enterprise?

Environmental legislation

Standards

18. To what extent does your enterprise comply with these (a) (b) (c) Do not comply with applicable environmental laws or standards laid down by courts Comply with applicable environmental laws and judicial decisions Exceed environmental standards and requirements laid down by law and the courts. 19. Do you think the Indian government (national/local) should promote investments (including Foreign Direct Investment) in renewable energy/ energy efficiency in order to reduce CO2 and CO emissions and support companies who can provide welfare/ export opportunities with low levels of pollutions? _____________________________________________________________________ _______________________________________________________________

20. How would you rate your company in terms of abiding by the laws and regulations for environmental protection? (On a scale of 1-5: 5 being highest)

163

Answers
Breaking the laws Trying to lower the standards Following the standards Going beyond the standards Going beyond the standards and suggesting new tougher standard

Rating

21. Do

the

terms Corporate

Social

and

Environmental

Responsibility or

Corporate Citizenship means anything to you? If so, what? What relevance do they have for your company? _____________________________________________________________________ _______________________________________________________________ 22. Which are the model companies in your sector in India and/or internationally and why? _____________________________________________________________________ _______________________________________________________________

164

Questionnaires

for

Export

Promotion

Council

&

Industry Association

1. What is the growth trend of sustainable goods & services in your industry? ___________________________________________________________________________ _____________________________________________________________________ 2. Are there any incentives (tax breaks, preferential public procurement etc) for the companies that are less polluting and/or are resource saving/reducing use of natural resource? Please discuss in detail. Yes No ___________________________________________________________________________ ___________________________________________________________________________ __________________________________________________________________ 3. Do you provide incentives for companies that report their environmental impact (positive and negative), or complying with quality norms such as ISO 14001 etc. Provide details. Yes No ___________________________________________________________________________ _____________________________________________________________________ 4. Do you provide information about sustainable market opportunities to the companies in the state (for example markets for organic food, environmental labeled goods such as forest, energy efficient solutions, renewable energy demand, dematerialized services such as e-governance solutions)? a. In India? Yes Yes No No ____________________________________________________________________ b. Abroad?

____________________________________________________________________ 5. Do you support researches that provide resource efficient solutions (through universities or support of research in companies)? Yes No If yes, please mention some research studies supported by you

165

___________________________________________________________________________ _____________________________________________________________________ 6. Do you encourage companies/industrial clusters to work collectively to find resource efficient solutions. Yes No

7. Do you help/support in creating awareness for sustainable goods and services (through public education about the role people have as a customer and that they can make environmentally friendly choices ) Yes No

If yes, please discuss any such activity supported by you ___________________________________________________________________________ _____________________________________________________________________ 8. Would you be interested in information about foreign markets for sustainable goods and services? Yes No

9. Which State is aggressively promoting the growth in Exports of Sustainable Goods & Services? Please name & rank the top 5 states.

S. No. 1 2 3 4 5

State Delhi Uttar Pradesh Haryana Karnataka West Bengal

Ranking

10. Please mention the achievements and improvement areas for different states towards promoting exports of sustainable goods & services. Achievements ______________________________________________________________________________ Scope of improvement

166