Tax breaks can incentivise reprocessing of construction waste

The buildings and construction sector currently account for over 40 percent of global carbon emissions, according to McKinsey, World Green Building Council and World Bank sources.

Over 400 mm of rain fell in the Raigad district in Maharashtra between July 17 and 19, leading to the collapse of a section of the hills which buried the Irshalgarh village and caused 16 deaths. A few days later the Matheran hill station developed a crack about 100 metres long and six feet wide. Climate change-induced intense rainfall is here to stay in the world and in many places in India. But intense mining of these hills to meet the ever-increasing demand from the construction industry that is poised to touch $1.4 trillion by 2025 (Economic Survey estimates) is creating many more problems in the several ranges of the western ghats, as predicted several decades ago by ecologist and environmentalist Madhav Gadgil.

Managing Construction Waste

On the other hand, cities are struggling to manage construction debris from rapid redevelopment across India to house the additional 15 percent of the population that will take urbanisation in the country from 35 percent to 50 percent in a few years. Currently, India is believed to be producing about 150 MT of construction waste, accounting for 35-40 per cent annually of global construction and demolition (C&D) waste. It accounts for 20 percent of municipal waste according to estimates by Central Public Health and Environmental Engineering Organisation (CPHEEO). In 2020, the Centre for Science & Environment estimated that India processes just one percent of its C&D waste.

Balancing that demand and supply mismatch is a simple enough solution that policymakers could very easily incorporate into building norms. Today technology allows reprocessing of construction debris to extract aggregates and material that reduces the need for fresh mining and extraction of material. This circularity of materials gives the construction industry many benefits. The buildings and construction sector currently account for over 40 percent of global carbon emissions, according to McKinsey, World Green Building Council and World Bank sources. So, for Godrej Construction which set up a recycling plant in Vikhroli in Mumbai, corporate responsibility was the driver. By focussing on using recycled building materials for reducing embodied carbon emission, addressing the operational carbon emission and adopting a net zero design approach by choosing lifecycle operations for greener construction, explains Anup Matthew, the group went for green as a concept. It pulverises concrete debris into fine recycled aggregates, that are used for manufacturing various types of solid, hollow, insulating concrete blocks and other customised prefabricated products.

Since operations began in 2017, the plant has already processed 30,000 MT of C&D waste in the city of Mumbai to concrete blocks and pavers for use internally and for sale in the external market. These products are Green Pro certified and get the user companies green credits.

Incentives To Recycle

Some policy-led benefits are already available when these recycled products are used. Since the plants operate with renewable energy, there is still further enhancement of green credits. Buildings that meet the criteria for these certifications may receive incentives such as tax benefits and higher floor area ratio (FAR) allowances. The government of Maharashtra's urban development department offers an additional FAR of 3 percent, 5 percent and 7 percent for green buildings rated by the Indian Green Building Council (IGBC) as silver, gold and platinum, respectively.

The Indian government offers tax incentives to encourage green construction. For example, under Section 80-IA of the Income Tax Act, developers of green buildings can claim deductions on profits generated from such projects.

However, these products cannot be priced favourably against traditional products because of the cost of reprocessing and a whopping 18 percent GST slapped on them. If that is revised to five percent or even zero to promote the use of such products made from C&D waste, they will become more competitive in the market and will attract more investors to clear the large tonnage of C&D waste in cities.

When the Supertech towers were detonated under instructions of the Supreme Court, the 80,000 tonnes of waste to be reprocessed by the plant in Noida was expected to take about three months.  Utkarsh Mehta of Edifice Engineering had spoken to this writer about how to handle the C&D waste. Even despite this planning, the recycling went behind schedule due to high pollution days in the National Capital Region.

Balancing the amount man extracts from nature and how much can be put back is a continuous struggle. Hills, mountains, and even the earth itself is under stress because of the uncontrolled extraction of water and minerals. Today it is the actions of a few good corporates that are bringing hope to the industry. A little policy tinkering can push this into a flood of good practices. Going by the cataclysmic disasters that hit the world practically every day, that should be sooner than later.

E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.