[Reader-list] Report on Eco/Labor Implications of IT in Asia

Soenke Zehle soenke.zehle at web.de
Wed Oct 31 14:38:53 IST 2001

Dear all,

I'm putting a short piece together called "Just Say No to E-Waste: How
Electronics Production Aggravates Global Water Struggles."
If you come across relevant nmaterial within the next few days, please send
it to me off the list. Thanx. S/Z

A Study of the Performance of the Indian IT Sector Prepared for the Nautilus
Institute for Security and Sustainable Development California Global
Corporate Accountability Project

by Radha Gopalan, 
Environmental Management Centre

Full Report at http://www.nautilus.org/cap/reports/index.html
(other reports about Malaysia, Taiwan, Thailand)

Executive Summary

The Electronics industry has emerged as the fastest growing segment of the
Indian industry both in terms of production and exports. This growth has had
significant economic and social impacts. Today the local and global impact
of the electronics industry has been due to its modern incarnation viz., the
Information Technology (IT) Industry. By definition the IT industry includes
the hardware "backbone" from the electronics industry and software.

The present study looks at the IT industry focussing on the environmental,
health and labor issues associated with its rapid growth.

Emerging from the study is this report which, has been developed based on
interviews with industry, industry associations, government officials,
academicians and civil society. The report also draws from a field visit to
Bangalore ­ the Silicon City ­ and review of literature and studies carried
out by other researchers in this sector.

The Indian IT industry has a prominent global presence today largely due to
the software sector. Promotion of the software industry and protection of
the hardware industry from external competition has resulted in this skewed
growth. More recently however, policy changes have led to a tremendous
influx of leading multinational companies into India to set up manufacturing
facilities, R&D Centres and offshore software development facilities. The
domestic market for both software and hardware is getting revitalized. All
these developments have had a significant impact not only on the economy but
also the environmental and social milieu.

A number of new policy initiatives are on the anvil to enhance and sustain
the growth of the IT industry ­ this time the focus being both on hardware
and software. Given these developments, some questions that emerge are: What
has been the environmental and social impact of this industry and how has it
been managed? What are the likely impacts due to the envisaged growth? How
can accountability and responsibility of this rapidly growing industry be

The report tries to answer these questions through a situation analysis of
the IT industry in terms of its structure and evolution, the existing and
emerging environmental and social issues and the associated regulatory
framework. Drawing from the findings of the situation analysis, a set of
recommendations are provided on how policy and governance measures can
ensure accountability and environmental and social responsibility of the IT

The report is composed of five chapters with the opening chapter presenting
a preamble that positions the electronics industry and the IT industry. This
puts the focus of the study in perspective.

The structure and evolution of the IT industry presented in Chapter 2.0
indicates that policy has played a very crucial role in shaping the
industry. Protectionist policies for the hardware industry and support for
establishment of a strong technical and scientific educational system led to
software dominated IT industry. This also led to extensive export of the
skilled labor force to service the international market and the presence of
a grey market in hardware.

The hardware industry meanwhile was relegated to the background. Trends
changed with liberalization of the Indian economy. Markets opened and
policies supporting foreign investments led to an influx of multinational
companies (MNCs)­ hardware and software. More recently, the software
industry has begun slowly moving up the value chain from programming to
systems analysis and design. More offshore work is being carried out in
India. R&D Centres and manufacturing (albeit only assembling of components)
facilities are being set up in India by MNCs. New policies and plans with
fiscal incentives, modifications in export-import policies, support for
infrastructure are now promoting foreign investment and focussing on
providing impetus to software and hardware sectors of the IT industry ­ both
domestic and export. This is also creating changes in the grey market.

Infrastructure and finance however appear to be the main deterrents to
growth. Given how the industry has evolved and the likely trend for future
growth, Chapter 3 identifies the significant environmental and labor issues.
While manufacturing in the Indian IT industry is primarily assembling, some
component manufacture does take place for non-IT applications. Software
development dominates the domestic IT industry with increasing off shore
work being carried out in India and the emergence of IT enabled services.

As a result of these developments the main environmental and social issues
facing the existing and emerging IT industry are: (I) solid and hazardous
waste management both during manufacturing and at the end of the IT
products¹ useful life; (II) phasing out ozone depleting substances from the
electronics sector; (III) implications of the increasing energy demands
given the power scarcity in the country and (IV) congestion and pressure on
local infrastructure such as land, roads, housing, water and power. The
magnitude of some of these issues like hazardous and solid waste management
in manufacturing are not as high as they would be in countries where there
are fabrication facilities but in India solid and hazardous waste management
at the end-of-life stage could very soon become a significant issue.

The labor issues facing the industry are: (I) challenges of retaining the
intellectual property in the country; (II) prevailing and changing working
conditions, health and safety at the work place, wages and (III) the role of
collective bargaining in the Indian IT industry. The Indian IT industry is
unique in that there is almost no unionization. Industry¹s response is
distinctly differentiated by whether they are MNCs or domestic players.
Corporate codes of conduct are largely adopted by the MNCs for environmental
management while for the domestic players environmental issues are not a
priority at present.

To understand how significant the environmental, social and labor issues
really are, the legal framework that regulates management of these issues is
discussed in Chapter 4.0. While comprehensive environmental laws exist,
enforcement is an issue. Moreover, till very recently the electronics
industry has been considered non-polluting. As a result regulatory controls
have been low. Emerging regulatory framework does address some of the issues
but also aims to simplify the laws for the IT industry.

The elaborate labor laws are undergoing reforms. For the IT industry however
a number of labor laws are being simplified to promote investments in this
sector and to enable the Indian IT industry to face competition from the
more relaxed labor markets of South East Asia.

Given this scenario, policy and governance related recommendations have been
developed to enhance accountability and environmental and social
responsibility of the industry. The report suggests that policies be
developed to: (I) strengthen enforcement through monitoring, measurement and
reporting thereby improving accountability; (II) ensure uniform zoning
country-wide of hardware and software facilities placing the onus of
operating and maintaining these zones on industry and industry associations;
(III) provide incentives for resource efficiency in the IT industry; (IV)
promote proactive and preventive approaches to environmental management as
well as product stewardship and asset recovery; (V) ensure a balance between
flexibility and worker rights while carrying out labor reform; (VI) promote
studies and R&D to provide technology support to the industry; (VII) create
awareness and strengthen civil society to increase industry accountability
and (VIII) increase stakeholder engagement.

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