A Study of Ecolables in India and European Union and Their Impact on Export of Leather Products From India Ghayur Alam

1. A Study of Ecolables in India and European Union and Their Impact on Export of Leather Products From India Ghayur Alam

2. Objectives-To study: • The performance of Ecomark in India. • The factors which affect the popularity of • Ecomark. • What can be done to increase the popularity and • impact of Ecomark. • EU’s Ecolable. • The impact of EU’s Ecolable on export of leather • footwear from India. • Linkages between sustainable development • and export from developing countries.

3. The focus of the study is on leather products. • It is based on more than 50 interviews • with: • Indian exporters; • Importers in EU countries; • Trade Associations in India and EU countries; • Agencies in India and EU Responsible for • administering Ecolable; • NGOs and Consumer groups.

4. Ecolables-brief introduction • market-based instruments • increase consumer awareness • shift consumer choice in favour of environmentally • friendly products • induce industry to manufacture environmentally • friendly products.

5. Ecolabel-criteria • i) product related. Limited to environmental impact • of product’s use and its disposal. • ii) process and production method (PPM). • PPM based criteria Requires Life Cycle Assessment. • They are more relevant for the promotion • of sustainable development • A number of Ecolables are in use. These include India’s • Ecomark, Germany’s Blue Angel, Nordic White Swan and • EU’s green flower

6. Ecomark-India • Introduced in 1991 • Available to consumer goods only • Similar to schemes in other countries • Life cycle based criteria • One major difference-linked to quality • Bureau of Indian Standards is involved • Available for 17 products, including • leather

7. Ecomark-India • Impact • Only 4 companies with Ecomark • Three for paper. One for detergents • None being used • No impact

8. Leather: Focus of the study • Why leather? • Important source of employment and export • employs more than 2.5 million people • export more than US$ 1800 million • Highly Polluting • pollution load include salt, chrome • inefficient use of resources, including water • and energy • air emission

9. Ecomark for leather • Introduced in 1991 • Criteria • i. The manufacturer must have consent from the Pollution Control Board • ii. Must conform with the maximum limits of harmful substances. • ii. The material used for product packaging shall be recyclable or reusable or biodegradable. • Not linked to quality characteristics • Impact • no leather product with Ecomark • no impact; no contribution to environmental • performance

10. Why Ecomark has not been effective? • general reasons • Lack of promotional efforts. • Little consumer demand • Industry not interested-do not see advantage • in the market place-concerned about brand dilution • complaints of procedural complexities, • leading to cost and delays • leather specific reasons • a majority of firms use old and inefficient technologies • highly polluting • a majority do not have consent from SPCBs. Not • eligible for Ecomark. (This implies that even if the leather producers were interested • in getting Ecomark, most of them would find it very difficult to meet its criteria.)

11. Ecomark should be seen as part of efforts to promote sustainable production. It would be effective only when there is an awareness and demand for environmentally friendly products and processes.

12. EU’s Ecolable-Introduction Established: 1992 Criteria based on cradle-to-grave approach- take into account all aspects of a product's life, from its production and use to its eventual disposal. Popularity limited to a small number of products and countries. Countries: most popular in Italy, Denmark and France. Products: most popular in textile and paints/varnishes

13. Number of ecolable according to countries Country Year 2001 2002 2003 Sweden 9 8 11 Greece 9 9 11 Spain 12 12 13 France 17 26 30 Denmark 18 23 31 Italy 13 23 34 Others 10 20 Total 88 101 150 Source: Flower News, various issues available at http://europa.eu.int/comm/environment/ecolabel/news/flowernews_en.htm

14. Reasons for low popularity • Similar to the reasons for the low • popularity of Ecomark in India • Low Environmental consciousness among consumers • lack of awareness of ecolable • poor response from industry

15. EU’s Ecolabel and Its Impact on exports from India • Two views: • 1. Ecolables can discriminate against imports • from developing countries. • Lack of transparency • pressure from local stakeholders • criteria based on life cycle analysis • need for new and costly technology to meet EU • Ecolable norms • 2. Developing countries can set up Sustainable Production facilities, Take ecolable and increase • export to developed countries

16. EU’s Ecolable and export of • leather footwear from India • EU Ecolable Criteria (footwear) • significant reduction in COD (Chemical Oxygen Demand) • and chromium in effluent; • non use of hazardous chemicals (azo dyes,PCP, TCP etc.) • use of recycled material for packaging.

17. Impact on India’s export would depends on: • how important ecolables are in EU markets of leather footwear • i. Will Indian firms be able to get Ecolable? • Evidence from India and EU: • ecolables are not important in footwear market in EU • ecolables have no impact on export from India • environmental issues, in general, play small role • importers are mainly concerned with banned chemicals- • not interested in the sustainability of production process • social issues (working conditions, minimum wages, • child labour etc.) play greater role. Many large importers • have their own social norms. Small importers not concerned

18. Future Scenario • situation may change-Ecolables may become • important in footwear market as: • EU companies adopting ESTs • steps being taken to promote Ecolable • large Indian exporters are beginning to focus • on higher end of the market • if Ecolables become important, How would export • from India be affected?

19. Can Indian firms increase their exports by obtaining • EU’s Ecolable? • All Indian exporters already comply with the ban on • hazardous chemicals • All exporters can use recycled material for packaging • Main problem: high pollutant load in effluent • (high COD, chromium). Most firms lack technological • and financial resources to upgrade • Not eligible for EU’s Ecolable and India’s Ecomark. • Large firms have the capacity to meet the Ecolable criteria if they see • business advantage • small firms are unlikely to take this route. They will continue to • cater to the lower end of the market, which is largely price driven. • Sustainable production in not likely to emerge as an important • impetus to export from developing countries. Even if environmental • considerations acquire greater importance in the EU market, only a • handful of large firms will be in a position to take advantage.

20. Conclusions • are Ecolables effective instruments to promote • sustainable development? • not very effective-especially in developing • countries such as India • Many reasons- • general lack of concern for environment. • Low awareness of Ecolable schemes, such as • Ecomark in India • consumers not prepared to pay more for products • with ecolable-companies not prepared to invest • in new technology • lax enforcement of regulations

21. Would adoption of sustainable production methods • promote India’s export of leather goods to EU? • Present situation: environmental issues play little role • in consumer choice of leather footwear-price of primary • importance. Little link between sustainable production and • export potential. • Future scenario: role of environmental issues, and • ecolables, may increase. Will this benefit exports from • India and other developing countries?

22. Large exporters- yes (May be). • Large Indian firms have technical and financial resources. • If it makes business sense, they may invest in sustainable • production technologies, take ecolable and try to increase • their exports . • Small exporters-no. • Unlikely to meet the conditions to get Ecomark • and Ecolabels. Lack technical, managerial and • financial resources to set up sustainable production • facilities. Their exports are likely to remain restricted • to the lower end of the market.

23. To conclude: • Ecolables have not been effective instruments to promote • sustainable development. • Presently, there is little link between sustainable production • and export to EU market. • If the situation changes and environmental issues begin to • play greater role in the market, Ecolable, could also become • important. • The potential of sustainable production as a way of increasing • export to developed countries is small. • A small number of large Indian firms may benefit by meeting • EU criteria and taking Ecolables. Small firms, however, do not • have resources to do this. • The overall potential of using sustainable production to • increase exports is limited.