The Silver Lining in the Fiasco of “Ease of doing Business”

India’s environmental regulatory framework has undergone a sea of changes in the last five years. From 1995 to roughly 2012, the entire emphasis of regulations was on sustaining forests, wildlife, wetlands and protected area network. However, in the last decade, some of the emphasis shifted onto regulation, management and disposal of waste. Post 2000, there has been a surge in the number of regulations, largely due to increasingly active participation of citizens, non-governmental organizations and the media. 

Between 2010 and 2018, four different legislations were introduced to regulate electronic waste, plastic waste, solid waste and construction waste respectively, beside existing legislations on hazardous and biomedical wastes.

History of Environmental Legislations

The establishment of the National Green Tribunal in October 2010 marks the evolution of the Indian environmental regulatory framework. The NGT acts as an autonomous and unbiased body under the Supreme Court of India. It has jurisdiction over all civil cases relating to the environment and the power to order relief and compensation to victims of pollution and other environmental damage. The NGT intends to deliver speedy and inexpensive justice in order to protect the Constitutional rights (Articles 21, 47, 48, 48A and 51 A (g) of the Constitution) of those victims who are unable to knock the doors of judiciary. This makes it a landmark legislative reform in the Indian judicial system.  

Together, these legislations and the establishment of NGT have brought the desire for and the right of Indians to a “Clean and Green” India at the forefront.

From its inception till 30th April 2019, the NGT has registered 29939 cases and resolved 27022 of them. 2917 cases are pending. In one of its landmark judgements of 2013, the NGT imposed a penalty of INR 100 crores (approximately USD 15 million) on Sterlite Industries for polluting the environment in the vicinity of its plant, and for operating the plant without a renewal of the consents by the Tamil Nadu Pollution Control Board (TNPCB) for a fairly long period, as per the norms. 

The growing concern of Indians towards the impact of industrial practices on the environment has been demonstrated several times in the recent past. The Tamil Nadu government had to order the shutdown of a controversial copper plant that locals had been protesting for more than 20 years. The order came days after police shot at a large crowd of protesters, killing at least 13 people.

A massive, global, youth-led protest demanding political action on climate change took place in March 2019, with 2,300 school strikes taking place in over 130 countries. Indian students of all ages and backgrounds took part in that mass class bunk as well. After seeing their elders fail repeatedly at dealing with global pollution levels and subsequent climate change, children around the world have decided to take matters into their own hands. 

The growing number of environmental and climate change related protests by people against political and industrial establishments, increased stringency in judicial enforcement for not complying with environmental norms and the advent of strict regulations and Green Tribunals, definitely leave enough reasons for corporates to worry.

However, this does not necessarily mean that corporates which are not able to meet national environmental norms risk closing their operations in India. In the last decade, we have also seen a conscious effort by  the government to boost Indian economy by embracing the concept of “ease of doing business”. India climbed 23 points in the World Bank’s Ease of Doing Business Index to 77th place, becoming, for the first time, the top ranked country in South Asia and third among the BRICS. 

The concept of “ease of doing business” has been incorporated in the environmental regulatory framework as well. With an eye on speeding up and simplifying environmental clearances for industrial projects, the High Level Committee on Review of Environmental Laws headed by former Cabinet Secretary TSR Subramanian submitted its report to the Union Ministry for Environment, Forests and Climate Change on 18 November 2014. The committee recommended formulating a new overarching law to streamline the process of environment clearances for development projects in the country.

The committee has proposed a new Environment Management Act (EMA) and two fulltime expert bodies, namely the National Environment Management Authority (NEMA) and State Environment Management Authority (SEMA), to provide single-window clearances in a time-bound manner. As per government sources, the new act also intends to reduce cases of corruption and bribery in judicial enforcement systems.

Many environmental researchers, lawyers and activists are sceptical of the Subramanian panel’s trust-based recommendation. However, TSR Subramanian asserted to a national online daily that “utmost good faith” is only one side of the coin; the flipside would be serious consequences for breach of faith. In case of a violation, the offending company can be asked to pay a spot fine. In addition, it may have to pay a deposit of more than twice the amount needed to repair the environmental damage it has caused. If the project continues to violate environmental norms, its clearance can be revoked. The final step, as per the committee report, would be holding the project proponent liablefor punitive or preventive action permissible in respect of serious offences.

The period after submission of the TSR Subramanian Committee report is marked by a series of ground-breaking rulings by NGT.

The most recent was directing the Central Pollution Control Board to shut down polluting industries in “critically polluted” and “severely polluted” areas within three months. The Coca-Cola bottling factory in Uttar Pradesh had to shut down as it extracted groundwater above legal permissible limits and polluted the environment with toxic effluents, reducing the carrying capacity of the area. 

The NGT ordered assessment of the carrying capacities of 102 cities, including Delhi, where air quality did not meet the National Ambient Air Quality Standards. The NGT is also assessing the carrying capacities of Manali and McLeodganj, who have been turned into concrete jungles due to illegal construction, and may ban construction in both as it did in Shimla.  

In another recent milestone ruling, the NGT imposed a fine of INR 500 crores on German auto manufacturer Volkswagen for damaging the environment through the use of “cheat device” in its diesel cars in India. Volkswagen had to pull out from its operations in India for not complying with the prescribed environmental norms.

As per this report, India’s economy is expected to grow by upward of 6 percent annually – among the highest rates of any big emerging economy – in the next few years. As the report states, the future of many multinationals depends on their ability to succeed in India. However, they need to learn to do business the Indian way, rather than simply imposing global business models and practices on the local market.

In order to earn the trust of the people as well as the regulators of this country, corporates must proactively demonstrate their intention to adhere to local environmental standards and regulations. For this, they must inculcate a culture of compliance and build effective, leadership-driven compliance management systems.The concept of “trust-based” compliance is an invitation from our national institutions to the industry to grow their business in the soil of the world’s largest democracy. Not to mention, this also comes with a caution of “serious consequences for breach of faith”.

Arnab Basu

Arnab Basu is a Sustainability Consultant, with 15 years of experience in advising industries and institutions on sustainability governance, environment and safety performance and complaisance.

The views and opinions expressed in the article are those of the authors and do not necessarily reflect the official policy or position of The Tilak Chronicle and TTC Media Pvt Ltd.

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