Is Water and Wastewater Industry at an Inflection?

July 20, 2024 | Quick Reads

“Water is life's matter and matrix, mother and medium. There is no life without water.”

India is home to a whopping 18% of the world’s population, but it only has about 4% of the world's resources. With cities growing and industries booming, the country's water demand is set to skyrocket from around 1040 BCM (billion cubic meters) now to about 1447 BCM by 2050. This surge in demand is made worse by problems like groundwater depletion, climate change, and poor water reuse and recycling practices. To make sure everyone has access to clean and safe water, it's vital to invest in water and wastewater infrastructure. This will help us make the most of our water resources and tackle the looming supply challenges.

Basic understanding of the value chain

Here's a quick rundown of how the water/wastewater treatment industry operates:

Consultants – The Planners: First up are the consultancy firms. These companies kick things off by analyzing the area where a Sewage Treatment Plant (STP) or Water Treatment Plant (WTP) will be built. They look at the local population, how much sewage is generated, and other key factors to figure out the plant's required capacity and other necessary things. They then draft up layouts that show the plant’s capacity, location, treatment technology, and a survey of the pipeline network.

EPC Companies - The Builders: Next in line are the Engineering, Procurement, and Construction (EPC) companies. They take the consultants’ plans and start building the WTP or STP, along with the necessary pipelines. They handle everything from getting materials to actual construction. Some EPC companies stick to engineering and procurement and hire others for the construction part. On bigger projects, even those that do handle construction might subcontract parts of the job. These companies usually also manage the operation and maintenance of the plants once they're up and running.

Component/Equipment Manufacturers - The Suppliers Then there are the component manufacturers. These companies supply crucial parts like membranes, bar screens, sludge digesters, pumps, and various filtration equipment. Some of these manufacturers also dabble in EPC activities, adding another layer to their business.

The Indian Water and Wastewater Industry Market size

Source: Frost and Suillvan, Niveshaay Research.

Do note, for the estimation of the market size of the industry we have only considered the EPC of the plants and the equipment. EPC for Pumping system and pipe laying works haven’t been included in this, which itself is a big opportunity under water.

Why water and wastewater Industry India

1. Repercussions of not treating wastewater are high

Ever wondered what would happen if we just let wastewater be? Spoiler alert: it's disastrous. Here’s a quick look at the major fallout of not treating our wastewater:

Water scarcity - Right now, about 7% of India’s population don’t have access to safe drinking water. On top of that, around 57% lack proper household sanitation. The water we do have is also getting scarcer. In 2021, the average annual water availability per person was 1486 cubic meters. By 2031, it’s expected to drop to 1367 cubic meters. FYI, if this number falls below 1700 cubic meters, we’re officially in “water-stressed” territory, and below 1000 cubic meters, we hit “water scarcity.”

Economic impact – Dirty water isn't just gross; it's expensive. Water pollution and related diseases put a huge strain on the economy. With 70% of India's surface water contaminated and many people lacking safe drinking water, water-borne diseases are common and cost around USD 600 million annually.

Regulatory requirements - As per regulations, industrial units are required to install effluent treatment plants (ETPs) and treat their effluents to comply with stipulated environmental standards before discharging into rivers and other water bodies. However, many industries still do not treat their water before discharging it. In response, the government has begun taking strict action against those who release untreated water.

So, it's clear: not treating and reusing wastewater has serious consequences. Whether you look at it from an environmental, economic, social, or regulatory angle, treating wastewater is crucial.

2. Massive gap in treat capacity and related infrastructure.

The Central Pollution Control Board (CPCB) reported that in 2020-21, rural areas in India generated about 39,600 MLD (million liters of wastewater per day), while urban areas produced a whopping 72,368 MLD. With the population growing and more people moving to cities, this amount of waste is expected to nearly double by 2050.

Also, besides sewage treatment plants, only about 30-35% of tier 1 cities have a good sewage network. It's even worse in tier 2 and tier 3 cities. On top of that, around 13-14% of the households targeted by the Jal Jeevan Mission (JJM) still don't have a tap water connection.

So, it's pretty clear that India still has a long way to go when it comes to having proper water infrastructure. This is super important for conserving water and reusing it effectively.

3. Government driving the investments.

It's the various government policies that are driving investments in water and wastewater. The Indian government has been emphasizing the importance of water and has rolled out several schemes for water conservation, treatment, and availability.

Here are six major schemes focused on water supply and wastewater treatment, have you heard of any of these schemes?

4. Stricter CPBC Rules Fuel Growth

Industrial growth and tougher regulations from the CPCB and NGT (National Green Tribunal) are ramping up the need for industrial effluent treatment plants. According to the Environment (Protection) Act, 1986, and the Water (Prevention & Control of Pollution) Act, 1974, industries and local bodies must set up ETPs, CETPs, and STPs to treat their waste before releasing it. The CPCB, SPCBs, and PCCs keep an eye on this and dish out penalties for non-compliance.

Since the NGT’s 2018 order, things have improved. Out of 2,859 heavily polluting industries, 2,197 are up and running, with 2,059 meeting the standards, while 138 are still lagging. Those that don’t comply face show-cause notices and even shutdown orders. So, with stricter rules and booming industrialization, the demand for wastewater treatment plants is definitely on the rise.

Companies engaged across the value chain are given below: -

Conclusion: -

So, it's quite evident that India still has a long way to go in terms of developing proper water infrastructure. This is crucial not just for conserving water, but also for reusing it efficiently. Without the right infrastructure in place, we miss out on huge opportunities to optimize our water resources. Investing in better wastewater treatment and reuse systems can make a massive difference, ensuring we use our water wisely and sustainably for the future.

After all, taking care of our water resources is ultimately for our own benefit. By conserving and reusing water effectively, we secure a better future for ourselves and the generations to come. It's time to step up and prioritize the health of our water systems.

Disclaimers and Disclosures

SEBI Registration No. :INH000017338, IN/AIF3/24-25/1571, IN/AIF2/24-25/1607 | BASL Membership ID: 6276

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