Sewage Swamped India’s Drive for Desalination

India’s biggest builder of water-treatment plants, VA Tech Wabag Ltd. (VATW),expects sales to beat forecasts by rising as much as 20% annually as growing cities are overwhelmed by sewage drive government contracts.

The Chennai-based company, a former unit of Siemens AG, has surged 36% this year on orders to construct water- cleaning plants for French cities, a solar polysilicon factory in Qatar and a petrochemical plant owned by Reliance Industries Ltd. That tops gains of 16% by India’s benchmark Sensitive Index (SENSEX) and 13% by the 49-member S&P Global Water Index (SPGTAQD) for the same period.

India is leading sector growth due to contracts from municipalities struggling with clean water shortages and an inundation of sewage, Managing Director Rajiv Mittal said in an interview this week. Domestic sales jumped 35% in the 12 months through March, a trend that may extend over the next few years, he said.

The second-most populous nation is set to embark on decades of investment in sewage infrastructure because of an “acute shortage of water and growing needs,” Mittal said. India’s demand for clean water by 2030 may exceed supply by 50% while pollution is making what’s available unfit for human consumption, industrial or agricultural use, according to McKinsey & Co. forecasts and a government report.

India’s population of 1.2 billion is growing about 1.35% annually, according to U.S. Census Bureau data. It’s set to overtake China as the most populous nation by 2025, according to United Nations forecasts.

“The top line will always be driven by municipal demand in India just because there’s so much need,” Mittal said.Mumbai, the nation’s financial hub, itself will require $1 billion of investment to build eight planned sewage plants, he said.

“In Mumbai, not a drop of sewage is getting treated,” releasing pathogens and waste into coastal waters, he said. Most of India outside of the biggest cities doesn’t even have a wastewater collection system. “We have to start right from the basics. That will take a couple decades.”

The industry may get a boost after the government issued a draft National Water Policy in July that encourages industries to use recycled water though stops short of requiring that, Mittal said. In India, water is managed at the state level and the latest draft follows efforts to devise a nationwide legal framework for regulating the resource.