Govt considers industry status for waste management and recycling sector

The move has been a long-standing demand of the waste management sector.
The move has been a long-standing demand of the waste management sector.

Summary

  • The Indian government is contemplating industry status for waste management businesses to enhance their financial accessibility and operational oversight. This move aims to address rising waste generation and support the sector's growth amid increasing demand for recycling and e-waste management

New Delhi: The government may accord industry status to waste management and recycling businesses, two people aware of the development said, amid a push for circular economy.

This has been a long-standing demand of the waste management sector, as an industry status helps businesses get easier access to cheaper bank loans.

"This has been a constant demand by the waste management and recycling sector, and a proposal has been submitted which is under consideration with the government," said one of the officials mentioned above, requesting anonymity.

An email query sent to the Union ministry of micro, small, and medium enterprises (MSME) did not elicit a response till press time. Many of the businesses in this sector are MSMEs.

Apart from allowing businesses to secure loans at lower rates, industry status granted by the Centre or state government also entitles these firms to be exempted from some levies, and get benefits such as cheaper power supplies.

It assumes importance as India is likely to produce more waste in the coming decades.

A report on circular economy by the federal thinktank NITI Aayog indicated that India will generate 165 million tonnes of waste by 2030, rising to 436 million tonnes by 2050.

Also read: Most electric-car batteries could soon be made by recycling old ones

Waste management is a comprehensive process that includes planning, securing finances, as well as building and operating facilities to collect, recycle and dispose of waste products.

Financial institutions are not confident in lending to enterprises in this sector, as they often lack creditworthiness. "It is important to have operating income exceed operating expenditures, including interest on existing debt, to increase the creditworthiness of municipal agencies (which undertake waste management projects)," said a working paper by the Prime minister's economic advisory committee (PM-EAC) in March 2024.

Approximately a third of all businesses operating under this sector work in a public-private partnership model, the paper said, as securing finances has proven to be difficult.

According to estimates by Mordor Intelligence, the market size of the Indian waste management industry is currently at $13.69 billion and is expected to reach $18.40 billion by 2030, at a CAGR of 6.1% during the five-year period.

The growth in the waste management domain is likely to be on the back of rising demand due to green mobility, as well as overall economic development in the country's urban centres.

Household waste management is commonly undertaken by civic bodies and municipal agencies. However, recycling and disposing of e-waste as well as waste from batteries used in zero-emission vehicles assume importance with the rise in consumption of electronic devices and rising sales of electric vehicles.

Also read: Govt to revamp revival framework for MSMEs

Sales of electric vehicles rose from about 10 million in April-November 2023 to over 13 million in the corresponding period in 2024, according to data provided by the ministry of heavy industries.

The Indian electronics sector has grown self-reliant over the last few years, manufacturing products worth over $101 billion in FY23, compared with $48 billion in FY17, according to a NITI Aayog press statement in 2024.

“The majority of the investment expenses for waste systems are borne by the private sector and national government subsidies, with local governments often only covering roughly half of these costs. It is uncommon for the central government to directly regulate solid waste services; instead, most services are governed by local municipal bodies," said the PM-EAC working paper cited above.

Amid financial constraints, local bodies or municipalities often implement these services in a poor manner, the working paper added.

Experts echoed the PM-EAC working paper's analysis that granting industry status to this sector would allow waste management firms to secure credit at lower interest rates. "The companies in this domain could also start operating as an industry in industrial zones, and it would allow the government, the pollution control boards and the departments of industry, to have more oversight," said Suneel Pandey, director, TERI.

Queries sent to the MSME ministry and the ministry of commerce and industry remained unanswered till press time.

Also read: Green MSME policy to provide financial, technological support likely in budget

 

 

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