E-recycling sector to reach $198.5 mn by 2032 at CAGR of 13.52%: Ind-Ra

The report also underlined the need for a strong reverse logistics network for e-waste procurement to ensure contract fulfilment and technical expertise to gain EPR revenue

The domestic industry can look forward to increased business opportunities in the e-recycling sector, which is expected to grow at a CAGR of 13.52 per cent, reaching $198.52 million by 2032, India Ratings and Research (Ind-Ra) said in a report on Wednesday.

The report also underlined the need for a strong reverse logistics network for e-waste procurement to ensure contract fulfilment and technical expertise to gain extended producer responsibility (EPR) revenue.

India ranks as the third largest e-waste producer after China and the US, it said, adding that Switzerland remains one of the most efficient e-waste recyclers in the world, followed by Sweden and Norway.

Citing an Astute Analytica report, the credit ratings agency said the domestic e-waste management market is projected to reach a valuation of about $198.52 million by 2032 at a compounded annual growth rate (CAGR) of around 13.52 per cent during 2024-2032, hinting at a huge market.

Ind-Ra said there is a growing opportunity in the e-recycling sector due to technological advancements and faster turnaround being provided by electronics, coinciding with the strengthening EPR policy endowing producers responsible for e-waste management, it said.

Historically, due to a lack of adequate infrastructure, the Indian e-waste recycling industry has been dominated by unorganised players with a sub-optimal disposal of e-waste, creating health risks and environmental hazards, Ind-Ra said.

According to the ratings agency, the Central Pollution Control Board (CPCB) provides a list of registered and authorised recyclers specifying around 569 such players across India, supporting an annual capacity of 1.79 million metric tonnes per annum under E-Waste (Management) rules.

According to the rating agency, organised players are likely to witness growth amid the elimination of informal players by mandating CPCB registration and the need for continual compliance with the requisite standards and certifications.

"With dual revenue streams of high-margin EPR revenue and premium-priced ESG positive extracted metals sale, the e-waste recycling industry is poised for an organisation of the historically grey area, traditionally exposing e-waste to sub-standard and environmentally unacceptable conditions posing physical and environmental risks," said Abhash Sharma, Senior Director for mid-corporates at Ind-Ra.

The recent policy amendments almost doubling EPR fees/kg of tonnage processed paid by original equipment manufacturers/producers to e-waste recyclers will likely increase the resilience of such players in an inherently volatile business model due to the low-lying correlation between procurement cost of input and realisation price of output, he noted.

Ind-Ra said it believes there is an untapped potential in EPR fees contributing 25-30 per cent to revenue.

With annual recycling capacities available and no fixed schedules for EPR billings, e-waste recyclers are likely to be exposed to working capital blockages during the financial year, the ratings agency said, adding that it is of the view that the working capital pressure at fiscal year-end will ease on account of OEMs' requirement for the fulfilment of annual EPR targets as specified by Central Pollution Control Board (CPCB).

The skewness of EPR revenue during the second half of the fiscal year is likely to result in fluctuating operating profitability levels, it said.

Calling for a strong reverse logistics network for e-waste procurement to ensure contract fulfilment and technical expertise to gain EPR revenue, it said an ability to procure e-waste directly from customers or limited middleman improves cost-efficiency by reducing mark-ups and lowering procurement costs.

According to Ind-Ra, there is an ongoing research and development (R&D) need which varies across companies, with seasoned players holding patented technologies requiring lower R&D spend compared to new players.

A regulated industry framework and the associated environmental risks make operating responsibly critical; any instances pertaining to non-compliance with environmental, health and safety norms pose a threat to continued operations of any player of the e-waste industry, Ind-Ra added.