Daikin, Johnson Controls-Hitachi and two Indian businesses sued the government in the recycling floor price policy, causing their compliance costs to increase many times.
Consumer electronics manufacturers Johnson Controls-Hitachi, Daikin (Japan), along with Havells and Voltas of Tata Group (India) filed a lawsuit against the Indian government from November to March this year on the recyclable floor price policy in the manufacturer’s expansion responsibility (EPR). Samsung, LG did not sue the government, but expressed a deadlock with this policy.
The expansion responsibility of the manufacturer is the policy of forcing the manufacturing enterprise to collect and recycle products made by them when the end of the life cycle is over. This provision applied in India since 2022, the previous price is agreed upon by the manufacturing enterprise and recycler.
An electronic waste recycling man at a scrap yard in Ahmedabad, India, April 9. Image: Reuters
However, from September 2024, the authorities imposed the floor price policy, requiring electronic equipment manufacturers to pay for the recycling unit at least 22 rupees (26 cents) per kg to recycle consumer electronics, 34 rupees (39 cents) per kg of smartphones.
The electronic market of this water consumption increases due to rapid urbanization, leading to an increase of electronic waste to 1.7 million tons in the fiscal year 2023-2024, double after six years, according to Euromonitor. India has become the third largest “electronic landfill” in the world after China and the US.
However, only 43% of electronic waste in India is recycled. 80% of them come from informal scrap facilities, causing environmental pollution and harming people’s health. New Delhi’s new policy aims to “shape” the recycling flow into the official area, and encourage investment in electronic waste management.
However, the price of the floor stipulated by the government many times higher than the previous price agreed, greatly affecting heavy electronics manufacturers such as air conditioning and refrigerators.
In the submission to Judges in New Delhi, companies believe that the Government’s measure is the unconstitutional, exceeding the powers under the Environment Law and increases the compliance costs many times.
Johnson Controls-Hitachi representatives said the floor price was four times higher than their previous payment. In court, they calculated that if the new price was applied with more than 10,000 tons of air conditioners recycled in the first financial year, the company had to pay US $ 2.6 million. Meanwhile, business activities in India are net loss of US $ 8.8 million. In the Government lawsuit group, Voltas estimates this cost will reflect in the output product price.
The Indian Environment Ministry urged judges to reject the lawsuits, saying that the pricing policy is reasonable and within their competence. The set adds that they want to prevent the “race to the bottom” on recycling prices. Except for Johnson Controls-Hitachi, the remaining companies did not disclose the previous recycling price.
The initial public bond issuance (IPO) of LG India at the end of last year warned that the recycling rate is higher than the impact “significantly to financial results”, though not detailed. A reuters source said Samsung’s recycling costs will be 5-15 times high, and the Korean electronics giants calling for New Dehli not to interfere with commercial transactions in this field.
While electronic manufacturers are concerned, recycling businesses are very supportive. Nitin Gupta, CEO of Atterero, one of the largest recycling companies in India, said the manufacturer only had to pay about $ 10 to recycle a washing machine at a floor price. Attero is recycling for LG and Daikin.
“We need more profits to increase the technological capacity in recycling. This is beneficial for us,” Mr. Gupta said.
Facing the conflict of benefits between manufacturers and recycling, electronics companies and Indian environmental ministries have not responded to the industry’s reaction and rules of valuation.