09 July 2024 – The Indian Express

Climate Resilient Industrial Sector of India

Introduction:

• The resilience of India’s industrial sector in the face of climate change is increasingly becoming a crucial issue. Recent data from May 2023 highlights a notable slowdown in core sectors, attributed mainly to an intense heatwave. While there was a rise in coal and electricity production due to heightened cooling demands, sectors such as crude oil, fertilizers, and cement saw contractions. This adverse weather impacted construction activities in northern India, diminishing the demand for cement and steel. Continuous weakness in fertilizer production also points to ongoing agricultural challenges. By adopting strategic measures to bolster the industrial sector’s resilience against climate change impacts, India can ensure sustainable economic growth and a robust industrial base.

Sectors Driving India’s Industrial Growth:

Information Technology (IT) and IT-enabled Services:

• IT sector remains pivotal to India’s economy, with projected revenues reaching USD 350 billion by FY 2026.
• Employs over 4.5 million individuals, contributing 8% to the national GDP.
• Rapid cloud services adoption is noteworthy, with the Public Cloud Services market expected to hit USD 13.5 billion by 2026.

Renewable Energy:

• As of December 2023, India ranks 4th globally in total renewable power capacity.
• The goal is to achieve 500 GW of renewable energy capacity by 2030.
• Notable projects include the world’s largest solar park in Bhadla, Rajasthan.

E-commerce and Digital Services:

• Indian e-commerce is set to grow at a 27% CAGR, reaching USD 163 billion by 2026.
• Growth is driven by rising internet penetration, with over 820 million active users.
• Digital payments are booming, with UPI processing over 74 billion transactions worth Rs 125.94 trillion in 2022.

Food Processing:

• India’s extensive agricultural base positions it as a natural hub for food processing.
• Rising incomes and urbanization fuel the demand for processed and packaged foods.
• Companies like ITC, Britannia Industries, and Nestle are expanding in this sector.

Aerospace and Defense:

• Aiming for USD 25 billion in defense production by 2025, India’s aerospace and defense sector is expanding.
• Policies promoting self-reliance include a 2020 ban on importing 101 defense items.
• Key developments include the Tejas Light Combat Aircraft and the Agni-V missile.

Pharmaceuticals and Biotechnology:

• India leads globally in generic medicine supply, contributing 20% of the global volume.
• The pharmaceutical sector is projected to reach USD 130 billion by 2030.
• The biotechnology sector is expected to grow to USD 150 billion by 2025, with over 5,000 startups.

Telecommunications:

• The telecom industry is the second largest globally, with 1.091 billion subscribers as of April 2024.
• The 5G rollout is anticipated to add USD 450 billion to the economy by 2040.

Electric Vehicles (EVs):

• The EV market is projected to reach USD 206 billion by 2030.
• Government policies like FAME II promote EV adoption, targeting 30% electric private cars by 2030.
• Plans are in place to install 69,000 charging stations nationwide.

Textiles and Apparel:

• India is the sixth-largest exporter of textiles and apparel, with the industry contributing 2.3% to GDP, 13% to industrial production, and 12% to exports.
• Initiatives like the Production Linked Incentive (PLI) scheme aim to boost manufacturing.

Fintech:

• Projected to reach USD 150 billion by 2025, India’s fintech market is thriving.
• Over 6,636 startups lead in digital payments, supported by government initiatives like Jan Dhan Yojana.

Government Initiatives for Industrial Growth

• Production-Linked Incentive (PLI)
• PM Gati Shakti- National Master Plan
• Start-up India
• Make in India 2.0
• Atmanirbhar Bharat Campaign
• Special Economic Zones
• National Monetisation Pipeline

Major Threats of Climate Change to India’s Industrial Sector:

Water Scarcity and Stress:

• By 2050, 50% of Indian districts could face severe water scarcity, threatening water-intensive industries like textiles, power generation, and agriculture.
• NITI Aayog reports water scarcity could cost India up to 6% of GDP by 2050.

Extreme Weather Events:

• The increasing frequency of extreme weather events poses significant risks to industrial infrastructure and operations.
• Cyclones, floods, and heatwaves can disrupt supply chains and halt production.
• Cyclone Amphan in 2020 resulted in USD 14 billion economic losses.

Rising Temperatures:

• Higher temperatures reduce worker productivity and increase cooling costs.
• India may lose 5.8% of daily working hours by 2030, impacting productivity and fiscal revenue.

Supply Chain Disruptions:

• Climate change heightens supply chain vulnerabilities, affecting industries reliant on just-in-time manufacturing.
• Extreme weather can disrupt transportation and raw material availability.

Regulatory and Market Pressures:

• Global climate action is driving stricter regulations and changing market dynamics.
• Industries face pressure to adopt sustainable practices and reduce carbon footprints.
• The EU’s Carbon Border Adjustment Mechanism could impact export-oriented industries like steel and chemicals.

Shifting Disease Patterns and Healthcare Industry:

• Climate change alters disease prevalence, challenging the pharmaceutical and healthcare sectors.
• Rising temperatures expand vector-borne diseases like malaria and dengue, necessitating rapid adaptation in drug development and healthcare delivery.

Climate-Induced Migration and Labor Market Disruptions:

• Climate change could trigger significant internal migration, affecting industries in origin and destination areas.
• Rural industries may face labor shortages, while urban areas could struggle with population influx.

Changing Atmospheric Chemistry and Industrial Processes:

• Increasing CO2 levels can impact industrial processes, like cement curing and chemical synthesis.
• Industries may need significant R&D investments to adapt processes sensitive to temperature and humidity changes.

Coastal Industrial Corridors at Risk:

• Major coastal industrial corridors face threats from sea-level rise and intense cyclones.
• Cyclone Nisarga in 2020 forced operations shutdown at Jawaharlal Nehru Port Trust, disrupting national supply chains.
• Measures to Enhance Climate Resilience in India’s Industrial Sector

Industrial Symbiosis Parks:

• Develop parks where industries utilize each other’s waste and byproducts, creating a resilient ecosystem.
• Example: A steel plant’s waste heat powering a textile factory, with a biogas plant fueled by food processing waste.

Climate-Responsive Architecture for Factories:

• Mandate and incentivize climate-adaptive industrial buildings.
• Features: Self-shading structures, green roofs and walls, underground factories, and floating factories.

AI-Driven Climate Risk Management:

• Implement AI systems integrating real-time climate data and industrial operations.
• Capabilities: Predict risks, adjust production schedules, optimize supply chains, and suggest adaptation measures.

Decentralized Micro-Grid Networks:

• Encourage industries to form climate-resilient energy networks with renewable generation and storage capabilities.
• Interconnected micro-grids allow energy sharing during disruptions.

Vertical Integration of Agriculture and Industry:

• Promote vertically integrated agro-industrial complexes combining climate-controlled farming with food processing.
• Example: Multi-story complex growing tomatoes and producing ketchup, powered by rooftop solar.

Underground Water Banking System:

• Create a nationwide network of underground aquifer recharge and storage facilities.
• Pump excess monsoon water into aquifers for industrial use during dry periods, managed by smart sensors and blockchain technology.

Conclusion:

• Building a climate-resilient industrial sector is essential for India to navigate future challenges and sustain economic growth. By leveraging strategic measures and innovative approaches, India can enhance the resilience of its industrial base, ensuring sustainable development and long-term prosperity.