By Souryabrata Mohapatra, Amit Mitra & Sanjib Pohit, Respectively assistant professor, School of Liberal Arts, IIT Jodhpur, and research associate & professor, National Council of Applied Economic Research
In a country where over 70% of urban wastewater is untreated and flows into rivers, lakes, and coastal zones, India’s wastewater challenge is not merely ecological but existential. India’s water and wastewater treatment market, valued at $13.1 billion in 2023, is projected to reach $23.8 billion by 2033, with 6.2% compound annual growth rate. This reflects accelerating urbanisation, climate fragility, and growing industrial water demand.
In 2020, urban centres generated 72,368 million litres per day (MLD) of sewage, but the installed treatment capacity was just 31,841 MLD. As of December 2023, progress remains uneven across states: Maharashtra treats over 8,000 MLD, while Bihar lags at under 400 MLD despite similar population pressures. This imbalance highlights a critical paradox — while India pursues piped drinking water to 146 million rural households through the Jal Jeevan Mission (JJM), it loses billions of litres daily due to inadequate wastewater treatment and reuse.
The industrial sector is a key player, with thermal power plants consuming 87.8% of all industrial water. Sectors like food and beverage, pharmaceuticals, textiles, and chemicals contribute substantially to the demand for high-purity water and treatment technologies. The industrial wastewater treatment sub-market was worth $1.44 billion in 2023 and is expected to grow to $2.4 billion by 2033.
Sewage treatment remains the second-largest segment, projected to grow from $5 billion in 2023 to $9.08 billion by 2033. Water treatment, including desalination and recycling, leads the market, as it expanded from $6.65 billion to $12.37 billion over the same period. This growth reflects mounting pressures from urban expansion, potable water demand, and environmental regulations.
Yet, despite the market potential, policy fragmentation persists. Even after consolidating water-related departments into the ministry of jal shakti in 2019, overlapping jurisdictions, slow state-level execution, and limited technical capacity derail many projects. By 2023 nearly 25% of sanctioned sewage treatment plants (STPs) were either under construction or stalled.
Our wastewater sector is shifting from traditional chemical treatments to membrane-based solutions like reverse osmosis, sequencing batch reactors, and membrane bioreactors (MBR). These technologies are driven by stricter compliance costs and mandates for water reuse. But with MBR systems costing up to Rs 1.2 crore per MLD and operational costs of `1-1.5 lakh per month per MLD, small municipalities and lower-income states face big barriers.
Public-private partnerships offer partial relief, with states like Tamil Nadu and Gujarat leading desalination efforts. Gujarat’s plants contribute over 100 MLD to urban supply. But decentralised systems for peri-urban clusters and small towns remain largely absent from policy focus. Advanced technologies like real-time monitoring and AI-enabled compliance tools are concentrated in large urban projects.
Government funding for water and sanitation is sizeable but insufficient to bridge the infra gap. In FY24, allocations included Rs 70,000crore for JJM, Rs 15,000 crore for Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0, and `20,000 crore for Namami Gange. Yet, only 67% of AMRUT 2.0 funds were utilised, and over Rs 6,000 crore of JJM grants were unspent.
Funding skews toward megacities. Smaller cities, responsible for over 60% of untreated wastewater, are under-resourced. Private investors cite high operational costs and uncertain returns.
Meeting the sector’s $23.8-billion potential by 2033 will require innovative financing like green bonds, water credits, and blended finance. Designing pricing strategies that encourage efficiency without burdening low-income users is a key challenge.
Flagship schemes like AMRUT 2.0 and Namami Gange have set up over 1,000 sewage and common effluent treatment plants. But success is often measured by infrastructure completion rather than performance. Central Pollution Control Board data (2023) revealed that 40% of STPs failed to meet discharge standards.
Mandates like zero liquid discharge (ZLD) for high-polluting sectors (tanneries, dyeing units, sugar mills) are steps forward, but enforcement remains inconsistent. For example, only 13% of textile units in Punjab and Haryana were ZLD-compliant by mid-2023. State-level variations are stark: Maharashtra, Gujarat, and Tamil Nadu exceed 75% of their planned STP capacity, while Jharkhand and Tripura are below 15%. A performance-linked federal grant system that rewards outcomes could improve accountability.
The greatest opportunity in India’s wastewater sector lies in embracing the circular economy — reduce, reuse, recycle. Recycled wastewater is used for horticulture, construction, industrial cooling, and flushing in cities like Pune and Surat. But nationally, less than 20% of treated wastewater is reused. Circular models enable energy recovery, nutrient extraction, and sludge-to-brick conversion. Pune’s use of sewage sludge biogas to fuel buses is a notable example, though still rare. Policy focus must shift from wastewater disposal to resource recovery, transforming every litre of into a potential source of energy, fertiliser, and reusable water.
India faces critical questions for the next decade: Can we transition from building infrastructure to delivering performance? Will pricing reforms drive innovation? Can India lead the Global South in circular wastewater economies? With 70% untreated discharge, a $23.8-billion market, and mounting climate risks, India’s wastewater sector is central to its ecological resilience and water security. Success will depend on policy realism, fiscal innovation, and a cultural shift — from viewing wastewater as waste to recognising it as wealth.