A Letter To Our PM: Let's Talk Trash Fridays

Welcome to another Trash Talking Friday, the only trash talk that calls you home for dinner, makes you cook and does not feel bad about it! 

Each week, I send you Ideas to ponder about. Ideas that have the potential to change your life, and hopefully help you become a better human being by understanding yourself.

This week I share a long-standing battle that I personally have been fighting to bring about change in the waste management sector here in India. This battle is being fought on many fronts including writing to our Honorable Prime Minister over 150 times in last year and a half. 

In this newsletter I share my latest communication with our PM and give you a brief about why these changes need to be implemented urgently. 

Let’s get into it!

Shri Narendra Modi

Honorable Prime Minister of India

South Block, New Delhi

India

September 15, 2020

Subject: Recommendations for the Waste Management Sector in India

Dear Honorable Prime Minister,

I have lost count of the number of letters that I have written to you in the past year and a half (approximately more than 150 letters) but have not lost hope in your in your ability to deliver change. 

I write to you again requesting you to intervene and stop the corruption, crony capitalism and vested interests of both government officials and private parties from high jacking your Swachh Bharat Abhiyan which is at the cost of the tax-payer’s money and our shared environment. 

Sir, I continue to write to you because state governments, even in states ruled by your party do not entertain small businesses, nor pay heed or respond to views of professionals in the field of waste management. They want grand projects that will make headlines, little realizing that micro, small and medium businesses are the back bone of any successful economy. To say that the global economy is going through a tough time would be an understatement and we know that the effects of CIVID 19 have had a severe impact on the Indian economy and its social fabric. Yet, innovative projects that provide mass employment and have proven their worth practically are not being allowed to operate. The entire waste collection, aggregation and processing business in India is being stifled, monopolized and cartelized by policies and tenders that are purposely killing competition by favoring a few vested interests who have long established financial understandings with government officials who are in-charge of these projects.

It is evident and visible across the country that mounds of garbage are only growing as current policies incentivize dumping of waste based on the flawed tipping fee model. The tipping fee model is flawed in more ways than one, as not only does it incentivize dumping of increased amounts of unsegregated waste since companies get paid on the amount of waste they dump on a per ton basis, but it is also open to massive manipulation. The tipping fee model is not only a gross waste of taxpayer’s money, it is also the reason why there is so little organized private participation, in the collection, recovery and processing side of the waste management sector. The tipping fee model is being promoted across the country to safeguard the interests of the certain parties, not allowing competition to enter on legal grounds citing provisions mentioned in the tender documents. 

Sir this is organized well planned robbery of the taxpayer’s money. There are numerous successful models present across our great nation that have been delivering fantastic results without any government support, yet these models are not being allowed to grow. Sir, I hear by request your intervention on the following matters: 

1.     Stop the tipping fee model.

2.     Introduce a reverse tipping fee model that will help the government generate revenues.

3.     Provide “industry status” to this sector. It is astonishing that a sector that provides mass employment and is responsible for ensuring the health and wellbeing of a nation does not have an industry status till date. 

4.     Open the sector up completely and allow private companies to participate in cleaning India through a non-tendering route, based on simple easy to follow guidelines and permissions.

5.     Remove GST that is levied on private firms that provide waste management services to other private companies. Remove GST from sale, purchase and processing of recyclable materials. Government contractors providing waste management services to government agencies are exempt from GST so why are private companies serving private enterprises being made to pay. 

6.     Implement a plastic tax on virgin plastic and make products made of recycled waste tax free.

7.     Allow the use recycled PET in the production of food grade plastic.

This country needs entrepreneurs to enter this sector in hordes, but the current policies are not business friendly, in fact they have the complete opposite effect in terms of attracting talent and money to this sector. Sir, it is not a hidden secret that 90% of door-door waste collection in our country is undertaken by the unorganized sector, even in cities where the work has been tendered out to private contractors. The municipalities, through vested interests are incapable of managing municipal waste efficiently, so I fail to understand why the sector is not being opened up to competition? Why do you continue to allow those with vested interests bury your flagship project and the dreams of young entrepreneurs wanting to enter this sector under heaps of garbage?

I sincerely hope that at least a dialogue can be started on these points as a first step towards bringing about change. Atmanirbhar Bharat will only be possible when micro, small and medium enterprises are allowed to become Atmanirbhar by reducing red tape, bureaucracy, corruption through a fair policy regime and implementation that promotes competition and innovation.

Jai Hind!

Sincerely,

Manik Thapar 

Founder & CEO

Eco Wise Waste Management Pvt Ltd. 

www.ecowise.net.in

So, there you have it! Firstly, I would like to set a few things straight. I have been in the waste management sector now for 15 long years, collecting, segregating, aggregation, processing municipal waste from homes, industries and commercial establishments. When I moved back from America, after living there and in Canada for close to 19 years to start this business, most people laughed, called me a kabari and could not comprehend as to why I would make such a stupid move. Not much has practically changed in this sector in regards to how waste is managed since I first started Eco Wise. 

The reasons have been purely selfish both for moving back and for continuously taking up this cause to bring about change that along with benefiting my organisation will also benefit the entrepreneurial and environmental landscape of our country. There are seven points on which I have requested our Prime Ministers intervention and here is the why behind each of those points.

1.     Stop the tipping fee model: Tipping fee simply means to get paid on a per ton bases to collect from place A and dump in Place B. In essence this model promotes and incentivises private contractors to dump increased amounts of unsegregated waste in our over flowing dump sites, which are visible for all to see. All government tenders in regards to waste management are based on this flawed model, that continues to cost the tax payer and the nation both financially and environmentally. This system is also open to massive manipulation, where by contractors fill their trucks with construction material to increase the weight and their billing. All this cannot happen without the involvement of government officials. 

2.     Reverse tipping fee: The opposite of a tipping fee. This means that the contractor pays the government to tip (dispose) their waste on public land, earning the government revenues and incentivising maximum recovery, recycling and processing of waste. Implementing the reverse tipping fee model is a vital part to reducing the amount of waste being dumped in landfills, minimising environmental disasters and putting an end to manual scavenging by children on landfills.

3.     Industry status: Well our Prime Ministers Swachh Bharat abhiyan is meant to tackle sanitation, of which waste management is central theme. Astonishingly, this sector does not have industry status! What would the benefits be? Will too many, but I will touch on few key points here. Industry status will hopefully provide the sector with one nodal ministry responsible to deal with all matters pertaining to waste. As of now, you have the ministry of urban housing and development, ministry of environment and forest, the Jal shakti ministry, Swachh Bharat urban, Swachh Bharat rural, CPCB, SPCB, NGT, all responsible for various aspects of waste management from policy formulation to implementation on the ground level. Talk about ease of business, oh, hold on did I forget to throw the municipalities in the mix who seem to have their own verbal laws and regulations in place. 

Makes access to funds a lot easier and cheaper for small and large businesses operating or looking to enter this sector. Waste management is a capital-intensive sector requiring investments in trucks, machinery and warehousing. As of now most of the sector in the unorganised and relies on private financing which charges interest rates ranging from 3-5% per month! On the organised side also, since the sector lacks industry status the going rates of interest are upwards of 17% per annum (without collateral).

Organising the unorganised, by helping them transition into an organised way of operating. The unorganised sector is a vast untapped source of information and data that the government has no access to. Leveraging their knowledge and data will only help in greatly improving the current system. The sector employees’ lacs of individuals from collection to processing and has further potential of generating vast amounts of employment and wealth, which will not only increase the standard of living for individuals at the bottom of the pyramid but for the entire country. Did I forget to mention increased amounts of tax collection for the government. Currently numbers are just thrown around about the size of the sector and about the amount of waste the country produces as data is neither transparent, traceable nor credible in the manner that it’s collected. An added benefit of providing industry status will be that of gaining access of too valuable data.  

4.     Opening the sector to competition: As of now the sector is being monopolised and cartelised by a handful of private government contractors based on the tipping fee model. Why is this a problem? Imagine you had only four brands of chocolates to choose from, only four models and brands of cars to choose from, only four restaurants that you could eat at. Well some of us reading this mail have experienced this first hand and others have heard stories about how India use to function prior to reforms being implemented, the most prominent of which was opening up the market to competition. The waste management sector is stuck in the dark ages in terms of how it operates and the control of the government over who it allows into this sector through ill planned and most of the times purposely planned policies that assist only a few. As of now, the sector works in a hybrid model, organised and unorganised, with the unorganised sector doing most of the heavy lifting of collection, segregation, aggregation and processing. 

Now think about this for a minute. The government tenders the entire cities waste management to one company, who is responsible to collect, segregate, transport, process and dispose your waste. The challenge is that most of these companies are only doing collection from secondary points and dumping the waste in landfills, with the informal sector doing collection from door to door, segregating your waste and dumping the rest on road side garbage houses from where the government contractor collects and dumps the waste in landfills, getting paid on a tipping fee model. If a private company like ours wants to enter the collection, transportation, segregation and disposal of waste (on a reverse tipping fee model) we are denied permission to operate on the grounds that the work has been tendered to one entity. It’s immaterial whether the entity is able to manage the waste effectively, its immaterial what they are doing with the waste, it’s immaterial if their process is causing grave harm to the environment and costing the tax payers financially; competition will not be allowed so that a corrupt system can be protected. 

A single entity is incapable of managing the complexities present in the waste management sector in India, as evident from 20 years of this flawed model being in operation and not being able to deliver. The mounds of waste have only increased. Opening the sector to competition from collection to processing will only benefit the consumer of these services whether industrial, commercial, residential or the government. Not only will create mass employment, it will help bring in innovation and a better way of doing things, reduce the burden of funding waste management operations on the government while providing them a revenue stream through the reverse tipping fee model. It will also help stream line this fragmented sector, helping organise the unorganised and ensure maximum recovery and processing of waste. 

So, when there are companies that are willing to invest their own money from logistics to processing and willing to pay a reverse tipping fee to the government to utilise its landfills to dump waste that cannot be recycled (20%) why is there such a push back? The reason is simple, maintain status quo to protect vested interests of a few, both in the government and the private sector. 

5.     Remove GST: As of now the private companies and the unorganised sector is working in the grey area when it comes to providing waste collection services. The law may not allow them to operate, but it does so by closing its eyes as municipalities and their contractors are incapable of delivering. This ties in directly to what I have mentioned in my points above in regards to granting the sector industry status and opening it up to competition. As of now the playing field is completed tilted. Private contractors who provide waste management services through the tendering route are exempt from paying GST, while private contractors who service private establishments are liable to pay 18% GST. In order to encourage entrepreneurs to enter this sector, a ten-year GST holiday must be given to new and existing entrants.  

6.     Tax virgin plastic and incentivise recycled plastic: This will help reduce the overall use of plastic in the economy and promote re-use and the use of recycled materials in manufacturing processes. By making products made of virgin plastic a lot more expensive than those made from recycled plastic, we can help drastically reduce the production of ever increased amounts of virgin plastic. This of course can only be done when there is proper infrastructure in place to collect and process post-consumer plastic waste at scale, when policies are in place to promote such break throughs and products and packaging is developed keeping their recyclability at their end of life in mind. The major reasons and benefits of a virgin plastic tax are the following: 

a.     Change behaviour through a carrot and stick approach 

b.     Move the cost of environmental damage to those who cause it 

c.     Increase revenues for the government, that can then be spent on nation building. (How this money should be spent or is spent in India is a completely different topic of discussion) 

7.     Allow recycled PET (R-Pet) in production of food grade packaging: All those bottles of mineral water, and more when disposed are mostly down cycled into making fibre for clothing. The FSSAI (Food safety & standard authority of India) as of now does not allow the use of recycled PET in the production of food grade packaging due to various reasons inducing lobbying by brands and some health and safety issues. Bottle to bottle recycling is the need of the hour. Not only will it reduce the amount of virgin plastic but also help our economy and environment. It will be a real boost for the recycling sector and help move our country closer towards a circular economy. 

The technology to do this is available, but investment will only start pouring in once there is clarity on policy and directive to brands to start using certain percentage of recycled pet in their bottles or packaging with the understanding to keep increasing the recycled content in their packaging till the entire packaging is made of 100% recycled PET. 

As of now there is bottle to bottle recycling happening in India too, but it’s happening unofficially. The neck portion of the bottle which has a higher IV (intrinsic velocity) is being used as of now to manufacture small country made liquor bottles (what we call addha, paua in local slang) by the unorganised sector.  

This has been a long article and for those of you who have made it this far, congratulation and thank you! As always, I am available to answer any questions that you may have, but would suggest you check with google baba first, as it will be a lot quicker than me! 

Until we meet again next week, have a fabulously sustainable weekend! 

Manik Thapar

Eco Wise Waste Management Pvt Ltd