India Struggles with Textile Industry Water Pollution

india struggles with textile water pollution

December 5, 2011 by Robin Bertelsen

The textile industry is vital to the Indian economy. The Indian textile industry is second only to agriculture in employment, providing jobs for over 35 million people. Textiles also represent more than 10 percent of the country’s exports. And, plans are for these numbers to only grow. However, there’s an elephant in the room which could cause major damage: water.

Even putting climate change aside, India has many factors contributing to water scarcity: increases in population, income, industrialization, and agriculture. On top of the growing demand for fresh water, is the fact that water pollution is also growing. Lack of domestic, agricultural, and industrial wastewater treatment and collection has led to high levels of water pollution in India’s lakes, rivers, and ground water.

indian companies ignore water risks

Despite the clear signs of water scarcity, few Indian companies are accounting for their water risks. In a study released by Crisil Research, in a survey of 500 publicly traded companies they found that “only 30 percent of companies reported that they have company level water policy for prudent management of water usage. Similarly, 22 percent of companies reported that they have policies to manage waste water discharge.”

Overall this situation is gloomy. Mr. Mukesh Agarwal, senior director at CRISIL Research said,

Most companies continue to have a cavalier approach towards use of water /waste water discharge and consequently, have been forced to face physical, regulatory and reputational damages. This has often led to significant impact on the financial performance, and in select cases, companies have even had to shift or shut down their business operations. Indian companies must therefore manage their water usage/discharge in a responsible and sustainable manner.

indian government taking action

Responsibility for water regulation and enforcement is up to the local states in India. This has resulted in “competition and conflict at all levels” according to the World Bank. But, there are signs of improvement and action, even if they’re uneven. Earlier this year, hundreds of dyeing units in Tirupur were closed by the state Pollution Control Board due to excessive water pollution. When some businesses wouldn’t close themselves, the local electric company cut their power. Most of them remain closed until the area has established zero discharge processes, which are underway.

The result of the dye houses being closed has been a hit to the Indian textile industry, with a loss of over $600 million U.S. and more than 50,000 jobs this year, not to mention the effect on supply chain issues for the global customers of these dye houses.

In other states, in order avoid closure, various dyeing associations are scrambling to construct common effluent treatment plants (CETP) at a significant cost to the companies. But even the establishment of the CETP doesn’t mean cleaner water. Poor planning led to at least one facility that didn’t meet the guidelines set by the state Pollution Control Board.

As the Crisil report says, “Going forward, growing scarcity and pollution of water, coupled with challenges arising out of climate change could pose serious risks to industrial and business operations in India.” Clearly, water is already a risk for the Indian textile industry.

International brands relying on Indian vendors for their supply chain need to take notice. As we’ve been talking about for some time, how excessive water use and pollution in the textile industry will take its toll. For decades the industry has relied on lax, or non-existent environmental regulations to produce cheap goods. But as China and India begin to understand the financial, societal, and environmental costs, we should expect more closures, unexpected costs, and supply chain disruptions so long as the industry remains water intensive. Not to mention, if these happen often enough, consumer confidence and brand value will suffer as well.