A technology crisis brews in the Indian refrigerator industry
Though a multilateral fund was established under the Montreal Protocol to help developing countries switch to alternate technology, India hasn't benefited by it. Says Ravi Sharma, associate director at the Delhi-based Centre for Science and Environment: "The dream that the Indian bureaucracy is selling of getting $2 billion from the ozone fund has fallen through. And we committed on a date in spite of no hard cash changing hands. The Indian consumer will have to pay for the switch."
In fact, no promises were made at Vienna to increase the funds or even continue it. But for India, it is important that the funds last as in the last three years it hasn't been accessed much. Says N.K. Krishnan, secretary, Ministry of Environment and Forests (MEF): "So far we have cleared 66 projects worth about $19.5 million." While the Egyptians have received about $8 million more than this, the disbursement to the Chinese is close to $100 million.
While the MEF earlier routed the funds through the Industrial Development Bank of India, the ministry is channeling them directly from this month. The fund has been active for five years (1991-95) and has distributed $418 million. About $119 million still remain outstanding from donor countries to the fund corpus—$64 million from Eastern Europe alone. One of the reasons for the low quantum of funds allotted to India so far has been bureaucratic delays in vetting proposals by the Environment Ministry before passing them on to the Montreal secretariat. For instance, while India got 66 projects cleared during the period, China topped the list at 149 projects. And in India the majority of the projects cleared so far have been in the foam sector.
No refrigeration project has got the green signal. A project submitted by BPL-Sanyo to make three lakh refrigerators was withdrawn because of slashing of project costs. Says Sharma: "The fund uses clever ways to reject proposals."
The fund has recently refused money to all Indian aerosol companies until the Government pledges that the sector wouldn't expand its CFC use. Says Anil K. Aggarwal, director, ozone cell, MEF: "Incremental cost of projects is being interpreted in a very narrow sense in Montreal."
The important issue now, however, is whether India would be able to bring an amendment in the protocol to allow a tail concept, essentially an extension beyond the year 2010. Says Ravi Sinha, deputy managing director of SRF Ltd, a company making gases for refrigerators: "They should at least allow refills after 2010 for us to be able to maintain our large domestic refrigerator base. The Government has so far been unable to persuade the fund to do so." Krishnan, however, is quite clear regarding what he expects from the protocol. "Their decision should have some consistency. We should not be required to retire our equipment. Either they should provide us retro-fitting costs or allow a servicing tail."
Availability of alternative technology, therefore, is very crucial. Though new CFC-free refrigerators, all under foreign collaborations, are using the opportunity to enter the market with HFC-134a-based (a more environment friendly CFC substitute) equipment, the high cost of this equipment will be passed on to the Indian consumer—who did little to punch a hole in the ozone layer. Besides, there is speculation that HFC-134a, too, will be banned under the climate change treaty as it has global warming potential, though it doesn't harm the ozone layer.
Currently, the Indian Institute of Chemical Technology in Hyderabad has achieved some success in a pilot project of HFC-134a production but the earliest SRF Ltd, the sponsors of the research, could go into production would be 1998. The other alternative: propane and butane-based refrigerators being developed by Godrej and Voltas under grants from Germany and Switzerland. But the hitch is that the mixture is highly inflammable and the technology is still considered to be immature.
But, with the production of domestic refrigerators estimated at 12 million units and with an annual production capacity of nearly three million units, the future of the industry is on a razor's edge unless the Government can either argue successfully for a tail concept or be the catalyst for a viable CFC alternative.