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Overview of Environmental Regulations for Business in India

Environment is the fountainhead of life on earth which constitutes water, air, soil, etc., and determines the presence, development, and improvement of humanity and all its activities. Environmental awareness is need of the hour and has to be cultivated in any society to be an ideal society. In the constitutional framework of India and also in the international commitments of India there exists a prerequisite for protection and conservation of the environment and sustainable use of natural resources. For Firms all over the world Environmental regulations generally require polluting facilities to undertake abatement activities which may impose costs on businesses. These regulatory differences across firms, sectors, or jurisdictions can cause changes in relative production costs. Such changes could arise from differences in direct costs. Hence Regulations in different Countries can induce important differences in pollution abatement costs.

Businesses and policy makers fear that in a world that is increasingly characterized by the integration of trade and capital flows, large disproportionateness in the stringency of environmental policies could shift pollution-intensive production capacity toward countries or regions with less stringent regulation, altering the distribution of industrial production and the thereby international trade flows.

There is an increasing concern, that the countries which have taken a lead in action against climate change, have in their efforts to achieve deep emission reductions put their own pollution-intensive producers at a competitive disadvantage in the global economy.

In addition to examining the direct costs of environmental regulation on productivity, economists have studied how firms respond to regulatory-driven cost differences based on which the decision on where to locate a plant. This Article predominantly tries to understand the framework of Environmental Regulations in India. Which can then be further scaled to understand cost impact and competitiveness of Indian Firms at global level.

List of Regulations and Legislations:

Given below are the list of Environmental Laws in India with brief on Regulations:

Water (Prevention and Control of Pollution) Act 1974: Boards at the Central and State levels are established to provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water.

Air (Prevention and Control of Pollution) Act 1981: Boards at the Central and State levels are established to provide for the prevention, control, and abatement of air pollution.

Environment (Protection) Act 1986 (EP Act).

This umbrella law enables the central government to take measures it deems necessary to protect and improve the environment, and to prevent, control and abate environmental pollution. It establishes the framework for studying, planning and implementing long-term requirements of environmental safety and laying down a system of speedy and adequate response to situations threatening the environment. A wide range of rules and notifications have been adopted under it, such as the:

o E-Waste (Management) Rules 2016, as amended in 2018 (E-Waste Rules): have been notified on May 1, 2011, and came into effect from May 1, 2012, with the primary objective to reduce the use of hazardous substances in electrical and electronic equipment by specifying the threshold for use of the hazardous material.

o Bio-Medical Waste Management Rules 2016: were formulated along parallel lines, for proper disposal, segregation, transport, etc, of infectious wastes.

o Solid Waste Management Rules, 2016: aimed at enabling municipalities to dispose of municipal solid waste in a scientific manner.

o Hazardous and Other Waste (Management and Transboundary Movement) Rules 2016, as amended in 2019 (HW Rules): brought out a guide for manufacture, storage and import of hazardous chemicals and for management of hazardous wastes

o Manufacture, Storage and Import of Hazardous Chemicals Rules 1989 (MSIHC Rules);

o Coastal Regulation Zone Notification 2019: with an objective to ensure livelihood security to the fishing communities.

• Wild Life (Protection) Act 1972: This Act was enacted with the objective of effectively protecting the wildlife of this country and to control poaching, smuggling and illegal trade in wildlife and its derivatives.

• Forest (Conservation) Act 1980: This Act was enacted to help conserve the country's forests. It strictly restricts and regulates the de-reservation of forests or use of forest land for non-forest purposes without the prior approval of Central Government

• Public Liability Insurance Act 1991: This Act was was enacted with the objectives to provide for damages to victims of an accident which occurs as a result of handling any hazardous substance. The Act applies to all owners associated with the production or handling of any hazardous chemicals.

• Biological Diversity Act 2002: This Act was born out of India's attempt to realize the objectives enshrined in the United Nations Convention on Biological Diversity (CBD), 1992 which recognizes the sovereign rights of states to use their own Biological Resources

• National Green Tribunal Act 2010: (NGT Act) has been enacted with the objectives to provide for the establishment of a National Green Tribunal (NGT) for the effective and expeditious disposal of cases relating to environmental protection and conservation of forests.

Regulatory authorities:

The key regulatory authorities are the:

• Ministry of Environment, Forests and Climate Change (MoEFCC): It is the nodal agency in the administrative structure of the Central Government for the planning, promotion, co-ordination and overseeing the implementation of India’s environmental and forestry policies and programmes.

• Central Pollution Control Board (CPCB): This is a statutory organisation, constituted in September, 1974 under the Water (Prevention and Control of Pollution) Act, 1974. Further, CPCB was entrusted with the powers and functions under the Air (Prevention and Control of Pollution) Act, 1981. It provides technical services to the Ministry of Environment and Forests of the provisions of the Environment (Protection) Act, 1986.

• State Pollution Control Boards (SPCB): There are State Pollution Control Boards at various state capitals of the country to advise respective state governments to control and protect environment. All SPCBs look after the interest of the respective states where they function. They implement the directives from CPCB and all Acts which are enacted from time to time. The SPCB has also branches at different towns in the states.

• District Level Authorities (that is, municipal corporations).

Framework for the Environmental Permits regime in India:

Environmental permitting is a key instrument for reducing industry’s environmental impacts. Permits facilitate compliance with environmental requirements and promotes technological innovation. In India Consent to Establish (CTE) and subsequent Consent to Operate (CTO) and their renewals under the Water Act and Air Act can be obtained by submitting a combined consent application to the relevant State Pollution Control Boards. To rationalize the environmental permit/consent system, and avoid repetitive and/or conflicting conditions, the Central Pollution Control Board has waived the requirement of having separate CTEs for industrial units which require an Environmental Clearance (EC) and in such cases, the EC will be considered equivalent to a CTE and no separate CTE will need to be obtained. Depending on the type of activities undertaken by a company, multiple permits may need to be obtained. The Ministry of Environment, Forests and Climate Change (MoEFCC) classify the industries it regulates. Such as white industries are non-polluting industries that no longer need a CTO or an EC under the Environmental Impact Assessment (EIA) Notification. Instead, they merely need to notify the relevant SPCB. Whereas the earlier industry categories (red, orange and green) were essentially determined based on the size of industries, this new method is based on a Pollution Index (PI) for emissions (air pollutants), effluents (water pollutants) and hazardous waste generated apart from the consumption of resources.

The key environmental permits, or consents/authorisations must be obtained from the local State Pollution Control Board (SPCB).

Only in certain cases is a consent/permit or environmental clearance (EC) needed at central level, from one or more of the following:

• The CPCB (for example authorisation as a producer under the E-Waste Rules 2016).

• The Ministry of Environment, Forest and Climate Change (for example, EC under EIA Notification, 2006, import/export of hazardous waste under the Hazardous and Other Waste Rules 2016 and so on).

• Central Ground Water Board (for groundwater extraction related permits)

• Petroleum & Explosives Safety Organization (PESO) (permits relating to storage of diesel at sites for generators).

The SPCBs have some discretion in determining the duration of consents, but there are efforts to streamline these periods for the various industry categories in each state. Characteristically:

• An initial CTE is valid for one year (for example, during the construction of a site, but depending on the scale of the project this could be longer).

• CTOs under the Water and Air Act vary between three to five years.

Renewal applications are typically granted across industries before 60 to 120 days of expiry of the consent to operate, assuming there have been no severe non-compliance issues. If there is a non-compliance issue, SPCBs can revoke the consent to operate and reissue it only after the non-compliance has been rectified. In such situations, companies often only obtain a one-year CTO, to ensure close monitoring by the SPCBs and ongoing compliance.

In India, today, development is having an increasing impact on the environment. The environmental issues are increasing on the agenda of government (including international agencies), private sector, non-governmental agencies and citizens. Environmental regulations can reduce employment and productivity by small amounts, in particular in pollution- and energy-intensive sectors, at least during the transitory period when the economy moves away from polluting activities and towards cleaner production processes. The environmental policies, plan, programs, norms and standards are also evolving to address the growing environmental concerns.

The management of environmental problems is, by its nature, cross-sectoral and multi-jurisdictional. As such monitoring is to be based on a set of indicators that achieve the strategic objectives. These indicators have to be measurable, based on existing data, which are observable, and are collected over a regular interval, are widely accepted, and easy to understand, comparable, and have a balance between positive and negative impacts. There is an economic cost to environmental regulation, generally those costs have been small in the short run and they have been associated with significant human benefits, but the cost in the long run now needs to be assessed and analysed. Regulatory cost is now a reality that Managements across Board are recognizing, hence the costs of environmental regulations need to be weighed up against the benefits they provide and which justify those regulations in the first place.


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