March 11, 2011 11:57 am
In an interview with Anil Mathew, Sasidhar Chidanamarri, Programme Manager – Environment and Building Technologies, South Asia and Middle East, Frost & Sullivan deliberates at length on the strides India is making in water treatment equipment front. Edited Excerpts:
How established is Indian water treatment equipment industry? What is the current market size of this sector and at what rate is it growing?
The Indian water treatment market is highly fragmented with over 200 equipment manufacturers supplying varied type of plants. Of this, only a couple of them are national players, while all others are localised suppliers enjoying up to 60% of the wallet share. In spite of so many suppliers, this market is yet to mature (because they are mostly from the unorganised sector) using the latest technologies and project management skills.
Our research indicates that the market size of the Indian water and wastewater treatment equipment was about Rs. 52,000 million (or, Rs. 5,200 crore) in 2010. It is expected to grow at a compound annual growth rate (CAGR) of 12% in the next three years.
What are the factors driving the growth of water treatment equipment industry?
Industrialisation, urbanisation and government impetus are the driving factors of this market. Currently, industrial segment dominates the overall market with a share of approximately 50%. Investment-driven growth in the industry segments such as power, pharmaceutical, biotechnology, food processing and refining has resulted in stupendous growth of both process water treatment as well as effluent treatment systems, with an up-trend in recycle and reuse equipment. Rapid urbanisation, growth of sub-metros and new nodes of economic activity are also driving demand for water and waste water treatment equipment and services.
Besides, scarcity of fresh water and the highly polluted state of surface water resources have necessitated the increased usage of treatment equipment. As the economy is growing, the urban local bodies or municipal corporations have been able to open their purse strings, to set up sewage treatment plants and drinking water treatment plants, to make our cities livable and competitive. For a case in point, Chennai has selected a technology provider and operator for its second desalination plant. Even Mumbai is planning to come up with a desalination plant, to meet the drinking water requirements of its population, which is expected to touch 6,300 million litres per day, (MLD) by 2021. In the coming years, share of the municipal segment in the overall market is expected to gradually increase, due to the impetus received from programmes such as national urban renewal mission and other programs sponsored by the state, central governments and international aid agencies.
Do Indian firms have capabilities in designing technologies for larger scale water treatment plants? If not, how important is it for them to develop such skills?
Technologies for water and waste water treatment have been traditionally sourced from overseas, due to high cost of technology development. It continues to be so even today. However, Indian companies have been very capable in adopting these technologies to Indian conditions and making them a success here. Thus, while the heart of the technology comes from abroad, there are enough resources and capabilities here, to design, manufacture, assemble and execute large water treatment projects.
With an increase in the number of suppliers, there is a pressure on the price levels of these systems and project costs. Therefore, using local sourcing of components to make it affordable to the price-sensitive Indian customers has become a must. The large domestic water firms are endowed with strong project management and execution capabilities and are technologically on par with overseas firms, when it comes to conventional treatment techniques. However, overseas firms have the upper hand when it comes to niche technologies like desalination, membrane bio reactors (MBR), bio-solids (sludge) management and sludge-to-energy. Also, in the bidding process, references, past experience in providing solutions to a similar industry, technology and balance sheets are a ‘must-haves’. Hence, Indian and overseas companies form a project specific alliance to meet the specifications in the tender.
It is very important for the Indian companies to invest in R&D aimed at new technologies or modify existing technologies, to suit the Indian market. The growing awareness about the pollution, coupled with the changing attitude of Indian industries to reduce their total water footprint, is transforming the market. Customers are seeking one-stop-shop for all their water needs, starting from installation of water and effluent treatment systems, to operations and management, to ensure effective water usage. In this context, it is vital for the Indian companies to offer ‘total’ or ‘holistic’ water management solutions.
Is there a huge demand for indigenously manufactured water treatment equipment? If not, why do companies prefer imported equipment to domestically made ones?
Domestic water firms are quite adept at manufacturing conventional treatment techniques such as demineralisation, media filtration and activated sludge technologies. The market is now seeing increased adoption of technically complex methods like UF pre-treatment, polishing of treated sewage to use it as process water, membrane systems, MBR and sequential batch reactors (SBRs) and moving bed bioreactors (MBBR). These systems are currently being offered by overseas players such as GE Water, Veolia Water Solutions, EIMCO and Siemens Water, with whom most of the Indian companies collaborate as and when a project comes up. Some of these overseas technology suppliers do not get into civil part of the project and merely act as technology suppliers to the Indian companies.
Are Indian equipment manufacturers competent enough to meet the competition from the foreign players? If not, which are the areas they have to focus to develop the much needed expertise?
There is no gainsaying that Indian manufacturers are equally competent to face the competition head on. Large Indian water companies are now executing large scale projects such as sea water and brackish water desalination, polishing to treated sewage for reuse as process water for large industries as well as indentified BOOT (build, own, operate, transfer) based projects in the municipal segment, as a business strategy for growth. It is going to be more of “co-optation,” where Indian and foreign companies compete as well as cooperate.
Mega trends are expected to create a paradigm shift in the market:
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