India's New EPR Draft That Ignore Ground Realities

What do you get, when you put a bunch of so called consultants, NGO's, PRO's, Brands & government officials on committee to draft EPR rules pertaining to plastic waste in India? A draft that refuses to acknowledge ground realities, is complex, licence driven & vague in nature. The current EPR draft if passed in its presents form is headed in the same direction as its predecessor, that of a dismal failure!

The EPR draft in its current form does not propose a single model, rather it proposes five different models of EPR and leaves it to the concerned parties to decide which model they prefer implementing. The five models as per my understanding are:

1. Fee Based Model
2. PRO Based Model (A Graded Model Based on Experience)
3. Plastic Credit Based Model
4. Producer/Exporter Based Model
5. Market Based Model

For a EPR model to be a success or in order for it to achieve a desired rate of success, the individuals involved in drafting it must have a through understanding of how the waste management sector in India operates from collection to processing both in the organised & unorganised sector. The team who has drafted these rules are either not aware of the ground realities or have purposely decided to not acknowledge them. They also seem to lack the basis premise of what the end goal of a EPR policy should be, which in my opinion is overall reduction of plastic waste through packaging design meant for recycling and eventually closing the tap to production of virgin plastic material. Use of plastic waste in Waste to Energy and road construction is definitely not recycling nor circular in nature.

Point 9.3.1 of the draft rules under the Fee Based Model mentions the following:

"The primary responsibility of the collection and segregation and final disposal of the plastic waste is with the ULBs. In the present scenario, the ULBs do not have sufficient funds and expertise for systematically collect the segregated plastic waste and then supply it to the recyclers/cement plants/etc. There is a need to build the capacities of the ULB in terms of infrastructure development and their expertise so that the waste management can happen systematically under the EPR mechanism."

Are these fellow's not aware that in all metros and most tire 2 & 3 cities the waste management contracts have been tendered out to single parties or multiple parties. They also don't seem to be aware that despite tenders been allocated to these private agencies by ULB's, Municipalities & Authorities the primary work of door - door collection, segregation, aggregation & processing (Plastic, Metals, E-waste In the Processing Side) is being done mostly by the unorganised sector. Along with this there is presence of MSME's in the collection, segregation. trading, aggregation & processing side for all sorts of plastics & waste materials. So the primary task of these waste management companies then becomes to collect & dump waste in open landfill on a tipping fee model, for which the ULB's, municipalities & authorities seem to have money to pay for.

Multiple rules including MSW Rule 2016 state that the unorganised sector & registered vendors must be allowed and given permission to operate in the waste management sector in India. Despite the rules, most ULB's have no policy in place to permit private enterprise or the unorganised sector to officially collect, segregate & aggregate waste. Despite the unorganised sector & many private companies engaged in door-door collection, segregation, aggregation and preprocessing of waste, they are unable to get permissions to operate officially from ULB's. Most of them state that there is no such provision in their laws and that the cities garbage contract has been tendered out or is in the process of being tendered out. Until the collection of waste from residential, commercial & industrial establishments is not opened up to competition, through a policy that promotes recovery & processing, is open for all to partake in, the system will remain unorganised, complex and far from transparent.

The Same point goes on to mention the following:

"Secondly, an important factor which is indirectly contributing to the cleanliness of the city are the rag pickers/assemblers/recyclers. They are anyway contributing to the mechanism of EPR without any benefit. This fraction of the stakeholders should be supported for the better management of the waste under the mechanism of EPR."

Firstly, they are not indirectly contributing, they are directly directly contributing to the high rates of recovery and recycling of not only plastic but all other categories of recyclables. It's not a fraction of stake holders, they are the majority without which a successful EPR system in our country in its current form is not possible. Without this network of officially not recognised unorganised collectors, sorters, aggregators & processors EPR targets will be impossible to meet.

The rag picker that they continue to refer to is at the bottom of the rag picking hierarchy. Yes there is a rag picking hierarchy & the people at the bottom of this system often pick through left overs that others in the unorganised sector have not recovered due to various reasons. You may consider them as bottom feeders cleaning up anything that may have been left by individuals above them in the hierarchy. As you keep moving up the hierarchy, collection, segregation, aggregation and processing capabilities keep improving. Many of these individuals or contractors are labelled unorganised because they don't have a legal standing, but many operate in the most efficient & organised manner, which puts government agencies and many large private contractors to shame.

The individuals who have drafted this policy have failed to understand how the unorganised sector in waste management is organised & structured with multiple layers of hierarchy, each adding value to the chain. Many plastic items will go through 5-6 hands before they reach the processing facilities & in many cases that chain is reduced to two to three hands depending on scale, efficiencies, knowledge & availability of funds. It is also important to understand how the funding mechanism works in the unorganised sector, with bigger aggregators working on a principal of advance payments to pre buy quantities of waste from groups of individuals engaged in primary collection, sorting and aggregation. To understand this system you must have either worked with these individuals or spent time in understanding how the system operates from collection to processing.

It may also surprise many that there are hundreds of contractors in the unorganised sector that collect, trade, aggregate, process thousands of tons of plastic and other types of waste in India while making money hand over fist, most of it in cash. From mom and pop shops that employ four to five individuals, to contractors that employ hundreds of collectors and segregators its a vibrant economy that is cleaning our country while generating lively hood and wealth at the bottom of the pyramid all the way up. Once again many of these individuals/contractors have the ability to scale up drastically, they even have the funding, but it's the policy regime thats holding them back, forcing them to operate in the shadow economy. Register these contractors, individuals, processing units, make it easy for them to formalise their operations through easy to access permissions and guidelines and let them freely collect not only plastic but all sorts of recyclables and non hazardous waste.

PRO Based Model:

The PRO based model has been a dismal failure, with inefficiencies, data manipulation through double accounting and trading of certificates. Now this proposed draft is throwing another curve ball! Here is what the draft is proposing for registration of PRO's:

"PRO registration may be divided into 3-4 groups based on their experience in the field. However, start-ups can also register on the website as PRO. There may be a group 1 PRO who has experience in waste management sector more than 10 years. Group 2 can have 5 years, group 3- 2 years and group 1 for beginners. This gives the brand owner and importer to select PRO based on experience. Further this will also give a chance to small start-ups who can provide solutions to small brand owners at local level or in far off places or small places where the experienced PRO does not want to go."

Why and how experience is important to register as a PRO is beyond comprehension. In essence, a PRO is a middle man fulfilling the demands of brands by connecting them with collection, aggregation & processing units while providing document proof of movement of goods and final processing. This clearly seems to be done to ensure a safe passage for established PRO's and to curtail competition from new entrants. It also removes the possibilities of individuals or contractors working in the unorganised sector with vast experience in collection, segregation and aggregation to register them selves as a PRO.

The government mentality of drafting everything based on experience has been a major reason as to why many choose to operate in the shadow economy, many never get the chance to prove their worth & the dismal state of affairs in the waste management sector. When you open a restaurant no one comes to you and asks what experience does the chef have, how does his food taste, what ingredients do you use, why is your table round, are your customers satisfied? The market decides this, and such should be the case with PRO registration. Let there be competition, let the makers decide who is capable and who is not. Such policies as mentioned in the draft rules are only monopolising and cartelising the sector further and is against the principals of a free market system of equal opportunities & work based on customer satisfaction and ground level impact.

Point 9.3.3.3: PRO Funding Mechanism:

Well here its is. The PRO will decides the fee rate and allocation of total program cost:

"This is a critical issue for obligated producers in the design and operation of the PRO and should be determined through consultation with affected companies. The common practice in other countries with established EPR programs for packaging is to assess a per kilogram fee rate for each specific plastic designated under the Rules. The methodology for determining the fee ratesand the allocation of total program costs across the plastics packaging chain should be established by the PRO in keeping with the program guiding principles. In particular:

(a) The per kg fee shall be calculated to include a contribution from all plastic types to fund common program costs (including PRO design & set-up; governance & ongoing administration; reporting, auditing & enforcement; developing state specific plans and obtaining SPCB/SPCC consent; contracting for program services etc.

There is no commonly accepted methodology for sharing EPR program costs across the plastic packaging chain. Where such cost sharing formulae have been adopted (e.g. the UK) the specific percentage allocation has been negotiated among the obligated companies, though it is generally accepted that brand owners and importers should accept a higher percentage of these costs given their dominant role in material selection and packaging design. However, the final cost shall be decided based on the costing of funds being spent by municipalities on the plastic part of the waste management and also the environmental cost."

Seems like the lesson has not been learnt. PRO's deciding the allocation of funds is like the accused telling the judge the term of his sentence. It has been observed previously that majority of the funds were bing pocketed by the PRO with very little going into the hands of collectors, aggregators and next to nothing in the hands of processors. In order for the system to be more effective this time around, the majority of funding needs to be deployed towards, collection, recovery, aggregation & processing, with collection & recovery accounting for majority of the share. The draft rules do mention that a higher fee will be applicable for MLP, but it has no mention of how much higher. This fee needs to be substantially higher for MLP in order to incentivise collection, recovery, aggregation and processing of this zero value material & other low value materials that are hard too recycle.

A reverse calculation needs to be done to establish fair price distribution amongst all stake holders. This needs to start with establishing the true cost of collection & recovery of recyclables plastics & MLP separately, and moving up the chain calculating the cost at every step.

Further its imperative that the EPR credits for material mined from landfills be stopped with immediate effect. Many PRO's through their cronies have accumulated vast amounts of MLP and other low grade plastic waste by contracting with companies that have won tenders to bio mine and clean legacy landfills. This is being shown as collection of post consumer plastic and certificates are being issued on this waste being sent to cement manufacturing units for burning.

The Plastic Credit Model:

This model is already in play, where a producer is not required to recycle their own packaging, but to ensure that an equivalent amount of packaging waste has been recovered and recycled to meet their obligation. This model in my opinion is what most brands will continue to opt for. This what how the draft envisions it to work:

"However, producers are mandated to acquire evidence of recycling or recovery [PLASTIC CREDIT] from properly accredited processors [recyclers, W2E plant operators, cement co-processors, users utilizing plastic in road] or exporters. Producers and processors/ exporters may exchange plastic credits for a financial transaction at a price and other terms as negotiated between them. The producers can exchange credits from processors that have been specifically accredited for this purpose and through proper registration at the EPR portal. The accredited processors therefore receive additional funding for every tonne of packaging waste they reprocess and have an incentive to acquire further tonnage, thereby driving up recovery rates".

This in a way is good news for processors who have been left out the EPR boom by crony PRO's. They now have the opportunity to work directly with brands and generate additional revenues from their processing operations, while getting rid of middlemen. This will also help aggregators and suppliers as processors will now have the ability to pass on some of these additional funds to their suppliers, incentivising the down stream for collection, recovery and aggregation. However a strict monitoring process will have to deployed when it comes to WTE plants, cement kilns and use of plastic in roads as these fields leave large possibilities of data manipulation & flawed reporting if left on a weak third party verification systems.

A Bunch of screws are missing!

Can you make chicken biryani without rice and chicken? Well according to this draft regulation you can. Point 9.1.1 states that to enable a comprehensive mechanism, the involvement of three major stake holders is imperative.

1. Producers, Brand Owners, Importers
2. PRO
3. Regulators

Comprehensive? What about the unorganised sector, collection agencies, aggregators, recyclers? No policy can be comprehensive in the waste management sector without the involvement of these vital links that form the very foundation of what the government is trying to achieve.

The Definition of Waste Collection Agency:

According to the learned who have drafted these rules, a waste collection agency comprises off, CBO, NGO, & Waste picket associations. Where are MSME's, who are involved in the collection, recovery & aggregation business. Have we selectively rendered part of the sector to be run by social sansthas whose survival is based on handouts? When will we start realising that this is not no more a social sector than any other industry and it requires professional private players, & startups to enter in hordes.

Definition aside, how can you have two parallel disconnected policies (MSW & PWM) working towards the same agenda with different approaches? As mentioned in the beginning of this article, its next to impossible to get permissions to collect waste in metros and tier 2 & 3 cities. Many cities have tendered out their waste management system to private companies. Will these companies allow for a parallel system of collection to exists? Will ULB's provide permissions when they have legally given the right for collection to one or a few agencies within a city? Will there be a completely separate system of collection for just plastic waste now?

It is imperative that policies be uniform in nature, specially when addressing a specific sector. The policy must be easy to understand, promote competition through a free market enterprise system, encourage entrepreneurship & innovation, along with being forward looking. Collection & recovery are key elements in any efficient waste management system and should never be monopolised, specially in a country like India where lacks are dependant on it for a lively hood & its one of the most pressing challenges the sector faces as whole. The government as mentioned previously needs to open up the collection and recovery side to private enterprises on a non tender basis, based on easy to implement rules and regulations.

There is massive gap that needs to be filled between services provided by the current contractor who has been provided the contract for the entire city and the specific needs to households, industries and commercial establishments. Both systems can operate in parallel and this will only help reduce the costs associated with paying contractors on a tipping fee model by the government. Besides cost cutting, it will help organise the sector into a more formal sector, attract increased investments, bring about innovation and create a new wave of startup entering the field.

In conclusion, I would like to mention one last thing. It's hard to pin point what the government is trying to achieve through this policy. There either seems to be a definite lack of understanding of the eventual outcomes of the effective EPR policy or certain elements have been deliberately left out. Take for example designing and using products to manufacture packaging that are easy to recycle using the current technologies available in our country. There is no mention of this. Though the policy mentions that its eventual goal is to move towards circularity, the basic elements of reaching that goal are missing. Let's take DRS (Deposit Return Schemes). The policy briefly mentions it with a caveat that it's the brand/producers provocative whether it wants to implement a DRS or not. Thousands of reverse vending machines have been sold in the country, some funded by CSR funds other bought using taxpayers money, a few on an advertising revenue share model. When studying EPR policies abroad they they not come across multiple articles and policy documents about the effectiveness of a DRS in increasing recovery and recycling rates? Why is this not been made mandatory?

Do you see the disconnect or is it only me? Does the government want us to believe that in a country of 1.3 billion people we can't get together practitioners who will be able to formulate simple, implementable, business friendly, environment friendly policies that actually have an impact! Comprehensive means taking every thing into account and then and only then coming out with a draft that provides one method of achieving the gaol through consultations with all stake holders. It seems the policy drafting team has failed at even that.

There will a much more details point wise evaluation of this EPR document (As I have not touched on many points here) that our team will be sending out to requisite ministry and publishing online for all to read in a weeks time.

For those who want read the entire policy document, you may do so by clicking the link Below:

EPR DRAFT POLOCY 2020

Manik Thapar (Founder & CEO)

Eco Wise Waste Management Pvt Ltd