Water Profiteers

By Anjali Kamat
India Resource Center
May 28, 2002

CHENNAI--Mathur, a village in Tiravallur district in North Chennai, is the site of a 15-year struggle against rapacious groundwater extraction. The perpetrators are private companies supplying drinking water to the water-starved southern city of Chennai. The Chennai-based State Ground and Surface Water Resources Data Centre has declared that the groundwater in the Mathur area has already been 'overexploited.'

Chennai, though, remains perennially thirsty. It was not always this way. Historically, the city's water security was ensured by a network of tanks that stored rainwater and recharged the groundwater aquifers that serve as the primary sources of water for the citys 6 million people. This network has long since fallen into decay. Most of the watersheds and waterbodies have been built upon. What remains has been turned into cesspools of garbage, sewage and plastic wastes.

According to the Central Ground Water Authority, more than 80 percent of the city's groundwater resources are already being tapped. The water scarcity in the metropolis reaches crisis proportions every summer. For the multimillion dollar packaged water industry, though, this situation is what rings in the profits. Over the last several years, water-starved Chennaiites have paid nearly $10 million (Rs. 500 million) to private water companies for 3.7 billion liters of potable water each month to augment the inadequate supply delivered by the state-run MetroWater.

More than 200 legal and 400 illegal water packaging units operate in the city and its surroundings, according to the South Indian Packaged Drinking Water Manufacturers Association (SIPDWA). By sinking deep borewells running powerful pumps in their small plots of land, water packaging companies have managed to willy-nilly privatize entire aquifers of common groundwater resources. Communities until recently self-sufficent for water are now on the edge of desperation as their water security is being compromised to serve the interests of the consumers in cities like Chennai.

The State Response

In 1987, the Tamilnadu Government legislated to conserve what's left of the metropolitan areas groundwater. The Madras Metropolitan Area Groundwater (Regulation) Act applies to areas notified under the act. In these areas, free extraction of groundwater is permitted only for domestic uses. Extraction for any commercial activities requires a permit from the competent authority. Because this Act failed to check groundwater exploitation, legislators have introduced a new bill aimed at strengthening the Act and widening its scope to cover more villages.

Water Business Thrives Amidst Scarcity

The all-India market for packaged water is between $145 million (Rs. 8 billion) and $21 million (Rs. 10 billion) and is growing at the rate of nearly 40 per cent per annum. 1 Even though it accounts for only 5 percent of the total beverage market in India, branded bottled water is the fastest growing industry in the beverage sector. 2

While the single largest share in the mineral water market might still belong to an Indian brand -- Parle's $52 million (Rs. 2.5 billion) Bisleri brand has a 40 percent share -- multi-national corporations are not far behind. Nestle and Danone are vying to purchase Bisleri, and Pepsi's Aquafina and Coke's Kinley brands have been extremely successful in edging out many of the small and medium players to buy-outs and exclusive licensing deals. In less than two years since its launch, Aquafina has cornered 11 percent of the market and Kinley has almost a third of the market. News reports indicate that other MNCs like Unilever are also eying the market.

Currently, Kinley is being manufactured in 15 bottling plants across the country and according to Coca-Cola India President and CEO Alex von Behr, Coke had invested Rs. 4,000 crore in India between entering the market in 1993 and December 2001. 3 Behr says that Coke expects a significant portion of our turnover to be accounted by pure water business.

However, as non-governmental sources observe, despite the inherent weaknesses of the Act, it is not the act but the lack of political will to implement its provisions that has resulted in the collapse of the city's water supply. Violators are seldom brought to book, and almost never punished severely enough to discourage them from mining common groundwater resources again.

Take the Mathur village, for instance. In 1990, Mathur was listed as a notified area under the amendment to the 1987 Groundwater (Regulation) Act. That meant that all commercial activities requiring groundwater would need to secure permission from the competent authority. Several mineral water companies, including brandnames such as Polo, King and Acqua, which operated borewells in Mathur were required to obtain a permit from the competent authority to continue extracting water for their bottling units. Despite protests from the local communities, the companies took no action and continued to illegally extract groundwater.

In 1995, M.P. Palani, President of the Mathur Village Residents General Welfare Association, sued the bottlers for illegal extraction of water and demanded compensation for the depleted groundwater resources. By the time the case was taken up in 1999, more than 60 private companies supplying water by tanker trucks had sunk additional illegal wells in Mathur.

Subsequent to a court order prohibiting groundwater extraction for commercial purposes in the area, the bottled water companies shut down. But illegal extraction by other operator continues unchecked. According to Palani, 30 private companies supplying water to Chennai by tanker trucks continue to operate from Mathur.

Palani has filed yet another case against the tanker companies for illegally drawing and selling groundwater from Mathur. The proposed amendment to the 1987 Act may strengthen the act, but the steps taken by the Government to check the water crisis are too little and too late, villagers say. "The authorities can easily control this kind of illegal extraction even under the existing law if they really wanted to. . . They are just not trying hard enough."

Precious Water Wasted

Independent observers say that the permit system for licensing commercial activities involving extraction of water is fundamentally flawed because no means exist to independently verify the quantity of water drawn by companies. Even worse, in the absence of accurate data as to who is drawing how much, it is virtually impossible to ensure efficient usage of water and minimize wastage.

Engineers from the Tamilnadu Pollution Control Board concede that under the circumstances, figures reported by the industry are likely to be gross underestimates. Even the conservative figures declared by the industry indicate that packaged water units waste anywhere between 15 and 35 percent of the water they draw from the ground.

Coca Cola, for instance, sources a bulk of its Kinley brand of bottled water from MVR Mineral Water, a contract bottler with a factory in Athur village, 40 kilometers from Chennai. The bottler reports that 132,000 liters of groundwater are extracted each day. Of this, only 100,000 liters are used for bottling purposes. The remainder -- at least 25 percent of the water drawn -- is discharged as effluents or lost to other processes. Virtually every packaged water company has externalised its costs to communities such as those in Athur and Mathur--communities that have been forced to contribute to the profits of these companies by involuntarily compromising their water security.

Chennai's Water Market

5 million quarter-liter packets at 2 cents (Re. 1) each
75,000 1-liter bottles at 20 to 25 cents (Rs. 10 to Rs.12) each
100,000 12-liter cans at 38-63 cents (Rs. 18 to Rs. 30) each
25,000 20-25 litre bubble-top containers from 80 cents (Rs. 38) upwards
10,000 water tankers carrying 12,000 litres each at $15-$19 (Rs. 700 to Rs. 900) per tanker.

(Source: South India Packaged Drinking Water Manufacturers Association)

Rather than restore the community's access to their groundwater resources, state governments across the country are succumbing to pressures from the World Bank and other agents of globalization to get urban and rural consumers to pay the real costs even for drinking water. Meanwhile, companies like Coca Cola, Pepsi, Parle, TEAM and Nestle seem likely to have unhindered access to free water from the ground.


  1. Ratna Bhushan, Bold and Bisleri, Business Line, April 25, 2002.

  2. Neha Kaushik, 'Coke's Plans Hold Water,' Business Line, Nov. 29, 2001.

  3. Ratna Bhushan, 'India is key Coke Area,' Business Line, April 24, 2001.

    Anjali Kamat is a freelance journalist based in Chennai.

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