IT's underbelly

Arnab Pratim Dutta visited Attero’s recycling unit in Roorkee, posing as a scrap dealer from Moradabad

Attero, India’s recognized recycling facility for e-waste, is about 20 minutes from Roorkee. Its walls and gates are about eight feet high. A signboard warns of CCTV. The security guards have orders to prevent outsiders from carrying inside mobile phones, pen drives or cameras.

I was there on May 3, 2010, with a scrap dealer from Moradabad in Uttar Pradesh. We were to meet D B Chhetri, head of administration and security of the plant, a retired lieutenant colonel. Security checks and a short walk later, we entered the office around 3 pm. Our meeting started 15 minutes later.

We said we wanted motherboards. Chhetri said he needed motherboards because “they are precious”. He offered to sell full computers and peripherals. Our conversation was interrupted by a man who walked in; he wanted to buy a Xerox machine. The deal got sealed quickly for Rs 4,000.

Chhetri then called an assistant to show us around. We were taken to a hall in which new computers were stacked. We wanted black computers; about 50 such were in the adjacent building. We decided we wanted 100.

Back at Chhetri’s office, we bargained—unsuccessfully. The standard rate for Pentium III machines was Rs 3,000; P IV machines cost Rs 4,000; and black computers commanded an additional Rs 500. We would be back in a few days. Chhetri asked us to bring motherboard samples for him.

Kareem, a scrap dealer from Seelampur, joined us on our second visit four days later. Chhetri told us that as per the environment ministry’s new rules on e-waste, Attero could not sell its wares officially to vendors from Moradabad and Seelampur—a fake receipt should do, he said. We would try out a sample first before placing the final order.

As we got talking, Kareem promised Chhetri he would buy truckloads of waste from Attero. Soon after, Chhetri took us to the godown. It was nothing short of a supermarket. Printers, printer cartridges, computer cabinets, hard disks, floppy drives, fax machines, Xerox machines—they were all there, neatly stacked in columns with their names labelled on signboards. Kareem checked the cost of each product. Keyboards cost Rs 20, SMPS (switched mode power supply, which transmits power from a source to the load, such as a computer) for Rs 55.

I chose a Dell Pentium IV with a 17-inch monitor, which had the serial number 3KKK81S. The Windows XP operating system was functional, I checked.

Chhetri signed the bill, in the name of my scrap dealer friend from Moradabad, on plain paper. As I left the premises, the security guard kept the bill and gave me a photocopy.

I had just bought a computer for Rs 4,500 from a registered recycler that boasts of being India’s only end-to-end recycling facility.

Ruhi Kandhari visited Attero to get their side of the story

After Arnab gave me a heads-up, I was prepared for the security checks. Four officials of Attero—CEO Nitin Gupta, Research and Development Director Praveen Bhargava, Administration and Security Head D B Chhetri and Plant Head Param Prakash—greeted my colleague Sayantan Bera at the building’s reception.

Chhetri explained why security was crucial for the Rs 35-crore plant—they had developed the recycling technology in their laboratories and did not want it leaked. Gupta walked us around the plant’s four units—shredder and separator, smelter, electro refinery, and research and development facility. It can process 36,000 tonnes of waste in a year, though it gets only 600 tonnes at present. Hence it imports e-waste from developed countries. Gupta said formal recyclers like them found the going difficult given the competition from the unorganized sector.

After we got possession of the computer Arnab had bought, I sent Gupta an e-mail. He replied: “As a company policy we do not sell an e-waste to the unorganized sector. We have a very transparent and open culture at Attero, as you might have witnessed during your plant visit.” Attero sold refurbished computers only if companies allowed it to refurbish and sell them, and they make their takeback policy clear when they sell it.

Arnab, though, did not get any such directives from Attero.

Sources in the Central Pollution Control Board said e-waste recycling units are not allowed to sell e-waste. They could sell refurbished computers if they have the board’s permission for it. Besides, Attero’s licence expired in December last year and that makes it illegal to buy, sell or recycle e-waste, the official said.

Naveed, along with his wife Khalida and their three daughters, wakes up every morning to extract gold and copper from circuit boards of dismantled computers (see: graphic). He can tell without difficulty which motherboard is from China, and which one from Japan. The Japanese circuit boards are better, he says, because they fetch him more copper and gold than the ones from China. As he burns the computer parts the plastic melts, emitting a red, toxic fume. The remains from the burnt heap—the metals—fetch him up to Rs 300 per day.

Living in a one-room house in Uttar Pradesh’s Moradabad town, Naveed has extracted metals for over 30 years now. Outside his house, in the Nawabpura colony, the locality is full of such one-room houses with dismantled parts of circuit boards strewn all over. Every family here specializes in one of the processes to extract metals from circuit boards. Some use gas torches to heat a board just enough to melt the solder, which separates the metal containing parts from the boards. Some acid-bathe parts, and some, like Naveed, burn the boards.

The circuit boards are sourced from computer monitors, cpus, keyboards, television and remote control sets, radios, cell phones and other electrical appliances that find their way into the township. Traders estimate about half the circuit boards used in appliances in India end up in Moradabad, also called peetal nagri —brass city.

The residents are immune to the smoke, the noise and the smell their work produces. Most of the township’s population extract metals on their own, or work with big traders, earning about Rs 100 per day.

Their processes are rudimentary—and risky (see: Informal v formal operators). Two motherboards, ususally weighing one kg, cost Rs 230. After selling the metals, they get a profit of 10 per cent. They ensure nothing gets wasted. “The poorest people in town even buy the dust that remains after burning the circuit boards to look for traces of copper,” said Salim, Naveed’s neighbour.

Seelampur: where e-waste collects

Salim, 24, entered the recycling e-waste business recently. His brother, among the biggest traders of circuit boards in Nawabpura, sources them from Seela-mpur, the e-waste hub on the north-eastern fringe of Delhi. The Seelampur market is also called the largest electro-nics dismantling market in the country, where over 50 per cent of used computers end up for sale and recycling.

The workers in Seelampur include teenagers such as Shanu, 15, whose hair shines golden in the sun because of copper extracts in it. He dismantles fans found in the cpus of computers. “Nobody likes going to schools here because we make more money than a government servant does. On good days we extract 10 kg of copper, at Rs 330 per kg,” he said. Separating brass and copper from plastic and rubber using a hammer fetches up to Rs 200 every day.

They are all called dismantlers, for their jobs involve getting computers, breaking them into its basic parts and selling motherboards to traders in Moradabad. The remaining metal and plastics do not reach there. These stay in Seelampur.

Seelampur gets e-waste from across northern India. All scrapped computers that are auctioned in the region wind up in Seelampur. Another source is kabadiwalas (waste pickers) who buy scrapped electronics from households. But almost half the computers are broken pieces from lots of imported secondhand computers.

Auction News, a bi-weekly journal in Delhi, publishes advertisements on scrap that offices or government departments want to auction. When recyclers gather in the offices concerned, auctions are held. In some cases, scrap is sold by inviting tenders.

But, with the government announcing in late April rules on e-waste to regulate the informal e-waste markets, the lives of Naveed, Salim and Shanu, and thousands of others engaged in the industry, might change (see box on p28).

Traders in Seelampur and Moradabad have heard about the announcement but don’t know what it means. They apprehend they might be out of business, but are not sure.

Regulating the informal sector

More than 90 per cent of the e-waste generated in the country lands up in the unorganized market, a mait-gtz report estimated. mait is an association of IT companies, and gtz works worldwide on sustainable development. City labourers find this work a lucrative opportunity to make money even with the hazards involved, the study said.

The government assumes it will be able to regulate the informal e-waste sector through its proposed rules on e-waste, which allow only registered com-panies with updated and safe techno-logies to recycle e-waste. Scrap dealers got to know of the rules at a recent auction by the Reserve Bank of India in Delhi to sell its old computers and printers. The bank rejected a recycler’s bid because he did not belong to the organized sector, the recycler said.

“Getting registered means having a large area and and technology. Only those with big investments can get registered,” said Daljeet Singh who attended the auction. He runs a recycling store in Mayapuri in Delhi. Most recyclers from the informal sector at the auction have studied till class viii, said Abdul Rasheed, another scrap dealer from Turkman Gate in Delhi. “Our livelihood depends on these auctions,” he said. Rasheed is a regular at such auctions and he sells electronic scrap to traders in Seelampur.

New rules are welcome

Organized recyclers, who formed e-waste recyclers’ association in July 2009, are cheering the new draft. One of their complaints is they are unable to make profits because of competition from the unorganized market. According to the association, about 10 per cent of the total share of the e-waste market is with organized recyclers.

A 10,000 sq ft formal e-waste dismantling unit in Noida can process up to 500 tonnes of e-waste annually. Since June 2008, when it was launched, the unit has processed only 200 tonnes because of lack of collection mechanisms, said Raj Singh, Noida unit head of tic Group India Pvt Ltd.

Clients of the formal recyclers incl-ude multinational companies that do not want their products to enter the grey market and compete with their new products. “Business process outsour-cing companies want their machines processed by formal recyclers to keep up an environment-friendly image. A certificate to this effect is awarded,” said Singh. “We cannot match payments of the unorganized sector. Unlike them we scrap all that we get from the companies. Informal dealers refurbish and make money from say a computer, which is a substantial quantum of e-waste,” he added. Informal recyclers argued if any part is found in working condition, it is a resource and it makes sense to refurbish it. They usually sell any part of a computer that is functional and it fetches them more money than what they would get if they broke it into metal and sold it.

India generated 330,000 tonnes of e-waste in 2007, which is equivalent of 110 million laptops, said the report by mait-gtz. About 10 per cent of the e-waste generated every year is recycled; the remaining is refurbished. The only way to sustain formal business in the given situation, said the association’s members, is the licence to import. Only Attero has the licence to import. Applications from other formal agencies are pending with the environment ministry.

Anatomy of A computer What's inside. What it's worth     View image

Economics of e-waste imports

Importing e-waste makes financial sense for the exporter country. For instance, waste traders in Europe or usa, who would have to pay US $20 to recycle a computer safely in their countries, sell it at half the cost to informal traders in developing countries illegally.

In the late 1980s, environmental regulations in industrialized countries and the rise in waste disposal costs led “toxic traders” to ship hazardous waste to developing countries. Basel Convention, an accord signed by 173 countries, mandated that developed nations notify developing nations of incoming hazardous waste. It said that unless the receiving government had legal structure that allowed imports for reasons such as recycling, export of hazardous waste from developed countries to the developing countries was illegal in principle. But the accord did not throw much light on e-waste. Even India’s hazardous waste management rules do not factor in e-waste import. This has helped the trade in Seelampur and Moradabad.

Will the environment ministry’s proposed e-waste rules manage to organize the informal sector?

Illegally imported e-waste reaches the Seelampur market every second day, said a 35-year-old trader in Delhi’s Nehru Place market. He runs a showroom of laptops and stores secondhand computers in the basement. “I know importing waste is illegal. But as long as ships come in, so do profits. My business of about 40,000 tonnes per annum of old computers is a trickle in the import of secondhand electronics market,” he said, requesting his identity be protected.

However, as per the estimates of the Directorate General of Foreign Trade, illegal import of e-waste in the country stands at about 50,000 tonnes annually.

Loopholes in laws facilitate illegal import. The country’s exim (export-import) policy allows import of secondhand computers not more than 10 years old, besides letting in computers as donations. “These provisions in the exim policy are unduly utilized by irresponsible developed economies to dump obsolete computers and computer scrap in our country,” said Gopal Krishna, convener of environmental non-profit Toxics Watch in Delhi.

Then there is the Customs Tariff Act that says new computers can be imported in India for free, but it does not mention anything on used computers. “Non-existence of classified categories does not imply that their trade is not allowed in India,” said the e-waste trader in Nehru Place.

“Both secondhand and new computers are placed under one head in the Indian Customs Tariff Act and therefore traders mix new computers with the old ones when they export,” he added. About 5 per cent of the old computers get damaged to the extent that they cannot be refurbished. These are auctioned to e-waste traders in Seelampur, he explained.

If a consignment of secondhand computers is found without a licence, traders manage to get the material by paying a penalty. “It is rare that such goods are confiscated,” an e-waste trader said. There is a chance, though, that the goods of repeat offenders are confiscated. But there are ways to avoid that, too—change the company’s name for instance.

“We pay a chartered accountant Rs 10,000 every month to register a new name for our company. That way, there is little chance that the computers we import are confiscated,” the trader said.

It is also easy to import “donated computers”. The Foreign Trade (Development and Regulation) Act of 1992 provides for donation of computers and its peripherals from zones that have been set up primarily for export at zero customs duty. Such donations can be made to recongnized non-commercial educational institutions, registered charitable hospitals, public libraries, public-funded research and development establishments and government bodies.

In reality, some traders procure old computers in the name of a donation to a school to get tax benefits. “I can get a registration for school under the Society Act of 1968 without actually establishing such a school,” said a trader in Delhi. But, if the new rules on e-waste are implemented he cannot do it anymore. The rules do not allow import of electronics under the category of donation.

Not quite there
The proposed rules, however, do not recognize the magnitude of transboundary movement of e-waste under different categories, said Aashish Chaturvedi, programme manager of gtz. “It only declares imports for charity illegal. What about the other ways through which e-waste is imported? For example, under the pretext of metal scrap and secondhand electrical appliances. Electronics can now be imported for refurbishing and repair,” he added.

The proposed rules, for the first time in India, bring in the concept of extended producer responsibility, making manufacturers liable for safe disposal of electronic goods. It requires manufacturers to take back the products after their life is exhausted and devise discount schemes for consumers who return the products.

The rules aim to promote green designs that limit the use of hazardous chemicals like lead and mercury in their products. “The essence of the proposed rules lies in the responsibilities assigned to manufacturers,” said Lakshmi Raghupathy, former director at the environment ministry. She is now part of the e-waste recyclers’ association.

But the rules do not detail the business model for collection of e-waste from consumers, said Vinnie Mehta, executive director of mait.

The draft also proposes to centralize e-waste management by describing the roles of dismantlers, refurbishers and recyclers by getting them registered. Chaturvedi, who is working on an EU-funded project to help organize the informal sector, said organizations in the sector should be given preference for getting registererd with the Central Pollution Control Board.

“Existing rules target the informal sector because their ways are risky and they cause pollution, but their role must be recognized. They should be helped in geting organized,” he added. Government establishments, though, are unfriendly, said informal associations that are trying to or have got registered.

A company called e-wardd got itself registered in March this year. It used to be an informal association of recyclers in Karnataka.

“It took us four years of training and fulfilling government mandates to get registered with cpcb,” said Asif Pasha of e-wardd. “The government did not offer us help in securing loans or getting land,” added Pasha who applied for the registration after training under gtz. He raised Rs 16 lakh to get the facility registered. Difficulties in the process will only deter other associations that have also been trained by gtz to apply for registration, Pasha said. Besides, they are yet to get a recycling contract because “big companies look down on them”.

Another such outfit, the Harit Recyclers Union, has registered as a society to begin the process of formalizing. Its member Shashi Pandit said the process would be difficult given the lack of government assistance.

The law currently does not provide for any plan to rehabilitate those involved in informal recycling, said a senior environment ministry official.

Switch possible?
The Department of Industrial Research, which studied the status and potential for e-waste in India in February 2009, said a symbiotic relationship between the formal and the informal sector was crucial. “The informal sector’s role in collection, segregation and dismantling e-waste needs to be nurtured to complement the formal recyclers as supply chain partners. They should take on the higher technology recycling processes,” the study said.

Efforts to integrate the two did not yield results, said Nitin Gupta, ceo of Attero. He said he was in talks with formal recyclers to get them to sell their printed circuit boards to Attero, but they have not agreed on a price yet. An association of informal recyclers in Seelampur also rejected Attero’s proposal because they could not agree on the price, members told Down To Earth.

Three months ago, in March, customs officials at the Tuticorin port in Tamil Nadu seized 20 containers carrying 500 tonnes of diapers, sanitary napkins, under-garments, surgical gloves—all used—along with shoe soles, broken toys, perfume bottles, aluminium foil packing material, batteries and bottles. These products, labelled waste paper consignment, were on their way for reprocessing from Greece and Reunion island to a paper factory in Sivakasi town.

The paper manufacturer, Sripathi Paper and Boards, was penalized for illegal import of hazardous waste and asked to export the containers and bear its expenses, said S Chandramohan, additional commissioner of the Tuticorin port. A similar incident happened in 2007-08 at the same port. It turned out that itc Ltd’s mixed waste paper consignment—40 containers—had high concentration of municipal solid waste. The next year the company returned the containers to the US as per a court order.

These are but a few success stories. Customs officials acknowledged their inability to check every container because of shortage of men and machinery. They resort to random checks—in the case of Sripathi Paper and Boards’ consignment the department’s intelligence team tipped off customs officials. Besides, it gets difficult because the department has to depend on engineers from pollution control board to determine whether a substance is hazardous.

Of the 12 major ports and 14 intermediate ports in India, one—J N port at Nhava Sheva in Mumbai—has two scanning machines. More than a million containers arrive at the port and it is impossible to scan every container, said Yash Vardhan, director of Container Corporation of India. The scanners have limitations. If cobalt-60, a radioactive substance, is packed in a lead box, the scanners would detect the lead because the metal blocks radiation from cobalt-60. “How should the customs department detect it?” asked Vardhan.

Beaches and small ports have grown to be hubs for illegal import of hazardous waste, said a senior customs official asking not to be named. “However much we try, several hazardous waste consignments bypass us,” he added.

Matchmaking, online

The standard procedure followed for importing a consignment to India involves an importer, an exporter, an agency registered and notified by the Directorate General of Foreign Trade, a bank and the customs department at the port. First, the importer is required to get a pre-inspection certificate of the import material by a registered agency, which could be an Indian or a foreign company.

After the agency issues the certificate, a bill detailing the number of containers, excise duty classification and product details is prepared. Then the consignment is shipped. When it reaches India, customs officials at the port check the certificate, levy a customs duty on the product as specified in the Central Excise Tariff Act and release the consignment to the importer.

If the material imported turns out hazardous, like in the Shivakasi “wastepaper” import, it is returned to the exporter, without a customs duty. Or not returned at all. “Confiscation of goods on such imports is rare. Imposition of a fine is part of organized corruption at the ports where customs clearance agents bribe customs officials,” a customs clearance agent in Kandla said. An official of the Directorate General of Foreign Trade also acknowledged that at times customs officials allow importers to escape the full penalty by an under-assessment of illegally imported goods.

Then there are times the importers are genuinely cheated. That is because they look for information on registered agencies and exporters mostly on the Internet. This has its share of risks—the biggest is that of getting cheated, importers say. Exporters show photo-graphs of a consignment, pure iron scrap for instance, but it turns out diffe-rent—mixed scrap—when it reaches the importer. Inspection can be done by checking the total amount of goods and verifying compliance with the standards of the destination country.

In India, the Union Ministry of Environment and Forests decides on what hazardous waste can be imported and exported. Under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, the ministry has placed import of hazardous waste items under three categories—substances that can be imported with prior consent, free imports under Open General Licence and prohibited.

The first category includes metal and metal-bearing wastes of antimony, lead, galvanic sludges and waste lead acid batteries, whole or crushed. An importer is required to have a licence from the Directorate General of Foreign Trade. The list in the second category comprises materials such as iron, steel and zinc scrap; lead scrap except lead acid batteries; waste of copper and its alloys. The waste listed in this category are traded under Open General Licence. The third category, prohibits import of waste contaning mercury, beryllium, arsenic, selenium and thallium.

Over 10,000 items, hazardous included, are imported in India, commerce ministry officials said. These items are classified under various heads. The category ‘others’ is given to those items that cannot be classified under any head. Even the environment ministry does not know how to describe categories such as ‘other waste and scrap’.

Traders often end up making use of ‘others’.

Secondary markets

“Different types of metal scraps are available in the international market. If I wish to import steel scrap and am not sure whether it’s pure, I would put it in the category of ‘other waste and scrap’,” said a dealer in Ludhiana.

Steel scrap is used to prepare secondary steel, of which India has one of the biggest markets in Asia. “With the scrap, input cost for preparing secondary steel reduces by 10 per cent. This helps earn more profits,” said a secondary steel manufacturer in Punjab who did not want to be named.

India’s secondary steel market has come under the scanner because of manufacturing defects—several times the steel made from metal scrap has turned out to be radioactive. In 2009 German magazine Spiegel Online reported that radioactive steel imported from India was on the rise in Germany. The country had seized 150 tonnes of contaminated metal exported by India between August 2008 and February 2009. In October 2008, radioactive substances were found in 500 elevator buttons prepared by French company Otis.

France imported the raw material used in the buttons from India. Five scrap recycle companies were held responsible.

But why import?

Recyclers in India say since they don’t get enough waste in the country, they are forced to import such waste.

India produces 6.2 million tonnes of hazardous waste annually, according to Central Pollution Control Board’s 2008 data. According to the board, hazardous waste generation is high in Gujarat, Maharashtra, Andhra Pradesh, Chhattisgarh and Rajasthan. These states do have common hazardous waste treatment, storage and disposal facilities, but not all the waste reaches the facilities.

There are pilferages, but it’s the duty of state pollution control boards to plug these loopholes, said an official of the environment ministry. A lot of the waste, added an environmental engineer from the Central Pollution Control Board, is disposed of into rivers, drains or landfills.

India imports most of its metal scrap from the US, the UK and the Arab countries. As per the US Institute of Scrap Recycling Industries, the country’s exporters in 2005 shipped more than US $350 million of scrap commodities to India.

In 2003-05, the Centre allowed import of 3.4 tonnes of cobalt waste and scrap, 101.1 tonnes of clinical waste in 2004-05, and 700 kg of sewage sludge the next year. In 2007-08, 0.3 million tonnes of asbestos and its compounds were imported, along with 120.06 tonnes of mercury and its compounds and 428.54 tonnes of arsenic and its compounds.

The choice India faces is this: either it stops importing waste and thereby gives up the option to make money from recycling. Or it imports waste but regulates it better so as to distinguish a resource from what the world wants to dump here unscrupulously.

Names of some people have been changed to protect their identity