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Is India Inc Missing Trillion Dollar Opportunity Of Climate Change? – Analysis

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By Sandip Sen

In the year 2010, barely two years after Apple produced the first smartphone, China doubled the price of 17 rare earth metals. These difficult to mine materials are considered critical to modern day electronics. Be it mobile phones, solar batteries, semiconductors, electromagnets, aerospace or defence industry, these rare earths are the backbone of the technology hardware world.

Incidentally, 95 per cent of the world’s rare earth is controlled by China. It did not happen by chance, but by design. The post Mao Chinese economic revival was shaped by party strongman Deng Xiao Ping after 1978. It ensured an annual GDP growth of 9.5 per cent for more than two decades, peaking to over 15 per cent in 1984.

How China established lead in green technology

In March 1986, four engineers under physicist and engineer Wang Ganchang conceived ‘The State High Tech Development Plan’ certified by Deng Xiao Ping that unleashed the blue print of China’s technology leadership. Among the seven key areas defined under the 863 programme was new materials or rare earth materials. Ever since, China has been investing in mining and learning the process of putting rare earth materials to industrial use.

China acquired much of the rare earth mines across the world before the turn of the century at throw away prices. Thereafter, it set up the complex intermediate processing centres for benefaction and separation. Here, after extensive trial and error involving thousands of chemical separation processes they perfected what is needed to separate rare earth metals and prepare them for industrial use. Then they built environmentally friendly industrial capacities for each of these complex  processes.

It took them more than a decade and sustained investment to  produce Neodymium, Lanthanum, Didymium, Cerium, Erbium, and over a dozen other rare earth materials. This was years before the first iPad and iPhone was built by Apple. The magnets of iPhones and the iPad has neodymium while there is in all probability lanthanum in the iPad’s lithium-ion polymer battery. Most solar power and high tech cameras have lithium or lanthanum batteries. China’s monopoly of rare earth gives it leadership and spectacular profits in new age green technologies. Lanthanum oxide today costs 15,000 RMB/ MT while Neodymium oxide costs 350,000 RMB/MT.

Is Indian Inc missing the electric bus

Riding on mining leadership, China threw open its MSME sector to electric two wheelers a decade back. Once again, while the world was sleeping, China was producing electric two wheelers which was the standard, non-subsidised,  transport for millions of its factory workers. It took China 10 years to build scalable capacities at affordable costs. Soon, 2000 Chinese manufacturers were  producing 30 million electric two wheelers annually by 2010. The Indian two wheeler and four wheeler industry refused to take heed and kept investing in fossil fuel engines. Reva, a MSME player, was the only Indian electric vehicle maker till 2010 making less than a hundred vehicles a year.

The difference between Chinese and India Inc is too stark to be ignored. China had an EV policy in place at the turn of the century. India still does not have one. Even the private sector is not too keen to invest in EV. BSE listed newbie bus maker Goldstone Infratech has outdone Tata Motors, Ashok Leyland and Mahindra in bagging orders for electric buses in India. Goldstone shares have skyrocketed in the BSE after it tied up with BYD, China’s biggest electric bus maker, last year. After delivering 31 busses last year to HP Transport Corporation and BEST , the Hyderabad based company received orders of 290 electric busses this year.  Tata Motors with orders of 190 and Ashok Leyland with 40 electric busses orders are distant competitors.

Is it not strange that Goldstone, who had no experience of automobile manufacture, has tied up with the world’s largest bus maker? The company is setting up a new plant outside Hyderabad with a capacity of 1500 buses per year. The buses from its new plant will be able to  travel 300 km with AC on after a single charge, claims its Managing Director NK Rawal.

China has dozens of electric bus makers and battery makers willing to enter India. The problem is with the Indian automobile industry. They are still waiting on their haunches for the Chinese to come to them at their terms  instead of taking the initiative to find the right partner. Negotiating with the Chinese is a difficult ball game, but considering their monopoly hold on electric vehicle and battery technology, can India afford to miss the bus?

Pollution is both a challenge and opportunity

India’s capital, Delhi, has been facing severe air pollution problems since the last two decades. CNG buses and autos became a reality after a Supreme Court driven intervention in 1998 specified the date of April 2001 for the compulsory CNG conversion of commercial vehicles. All buses, autos and cars in the city were to convert to the clean fuel, namely CNG, by that date. But pollution did not go away from Delhi even after CNG conversion. Instead, after 20 years, it has become even more severe than ever before.

Air pollution has been an old and unsolvable problem for two decades in India. As per CPCB not only the metro cities but even smaller towns across India are severely affected by air pollution. But the industry to measure air pollution has not developed locally.

In the last 20 years, the global market for air pollution equipment has increased to $15 billion. As per the Global Air Pollution Control Equipment and Technologies Report 2017, the market will be  growing at a CAGR of 7.8 per cent for the period 2016-21. But it is only a year back that Indian cities started measuring air pollution on a regular basis. We often tend to blame the Government, but the truth is that India Inc failed to put up measurement and mitigation equipment in the marketplace, despite inherent demand.

Why was India Inc not responsive? The problem has been there for two decades. Why do we not have manufacturers producing air pollution measurement and mitigation equipment in thousands. Why do manufacturing States like Gujarat and Tamilnadu have just one CPCB pollution monitoring  station? Why is there no equipment to measure Nox or other harmful gases that are slowly poisoning us?

The problem is not only with air pollution alone. Water pollution and treatment is also a major problem across India. The water bodies are polluted and there is an urgent need of measurement,  purifying and recycling waste water. But there are only a handful of Indian manufacturers. Technology is not updated and even pricing of equipment produced by them is high. China by contrast has several  thousand makers of air pollution and hundreds of water treatment equipment manufacturers.

So it is time that India Inc take the initiative to avail this trillion dollar opportunity of pollution monitoring and control that is so critical for its 1.3 billion inhabitants.


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Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

One thought on “Is India Inc Missing Trillion Dollar Opportunity Of Climate Change? – Analysis

  • April 23, 2018 at 8:22 am
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    A very good think piece. The successive Indian governments and the political actors are largely to blame for the woeful state of affairs in this regard. They paid lip service to tackle the problem of pollution and shied away from taking tough and long term measures. In the Indian context ti is understandable. if you are not sure of winning the next election, why bother with such problems. Just play along with vote bank politics. China is far ahead of many countries in development because it had strong, visionary and committed leaders for the long haul and never allowed themselves to be deflected from the task. Sadly India has not had any such leadesr. India Inc will respond if there is such a strategy and assistance from the political class. After all ,the business of business is to make profits by seizing opportunities.

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