RoHS: Is Indian electronics industry ready to face the challenges?

RoHS-related hazardous materials provisions in effect from May 2013

In India, RoHS-related provisions will come into effect from May 12, 2013.Although the cost of shifting to RoHS-compliant manufacturing will be quite high, if it is not done, in the long run, India could face greater risks, economically. Shifting to RoHS-compliant products, on the other hand, will open up wider business opportunities.

This article is based on the presentations at the seminar, ‘RoHS Compliant Electronics Manufacturing: Challenges, Solutions & Opportunities’, organised as a part of the EFY Expo 2013, on February 21, 2013, at Pragati Maidan, New Delhi

By Srabani Sen
Tuesday, May 07, 2013: With the demand for electronic products increasing manifold, the environment is under threat from some of the hazardous materials that are at the core of the components and modules used in electronic products. Besides, the fast changing technologies drive consumers to dispose of electronics products rapidly, increasing the generation of electronic waste at an alarming pace.

Realising that all hazardous substances from electronic and electrical equipment (EEE) cannot be recycled or disposed of in an environmentally safe manner, the Indian government woke up to the problem, though a little late. The Ministry of Environment and Forests (MoEF), Government of India, has notified the Restriction of Hazardous Substances (RoHS) rule, which in India is called the Electronic Waste (Management and Handling) Rules 2010, on May 12, 2011. The RoHS-related hazardous materials provisions will come into effect from May 12, 2013 (see box: RoHS II compliance deadlines).

E-Waste (Management and Handling) Rules 2010 aims to put in place an effective mechanism to regulate the generation, collection, storage, transportation, import and export of EEE. This is to ensure environmentally sound recycling, treatment and disposal of electronic waste.

The legislation also includes a chapter that deals with the reduction of the use of hazardous substances in the manufacture of EEE. India’s RoHS rules limit the use of 20 substances in electronic products for sale in India. They also ban a few substances, including some flame retardants that currently have no viable alternatives (see box: Permissible limits of banned substances).

RoHS criteria
Similar to the EU legislation, the Indian government requires manufacturers and importers to supply only RoHS-compliant products and to provide written documentation supporting compliance. “This aspect has resulted in an ongoing struggle in the electronics supply chain because documenting compliance often requires the disclosure of information that component makers regard as proprietary,” says Nainesh Dhanani, director, sales, Performax Analytical.

CE marking requirements were effective from January 3,2013

  Every electronics manufacturer or trader needs to procure and sell components, modules and products that are strictly compliant with the parameters set by the RoHS rules. Manufacturers need to make electronics products without using the prohibited substances listed in the rules (see box: Obligations for manufacturers, distributors and importers).

Why RoHS directives are essential
The European Union (EU) had done a detailed study of the various materials used by the EEE industries and it found that certain substances are hazardous to health, causing diseases like cancer, brain fever, kidney failure, etc. These hazardous elements can also affect the environment after the products are disposed of. For example, when over 100 workers in two Chinese battery factories fell ill in July 2004, their medical reports mentioned “…excessive levels of cadmium in their blood.”

“Today, considering its importance, most of the leading manufacturing countries have implemented this directive. Some countries have introduced their own RoHS directives by slightly modifying the EU-RoHS. For example, Japan’s J-Moss, the Korea-RoHS, the China-RoHS, and America’s US-RoHS are all operative in their respective countries,” informs Nainesh Dhanani (see box: Countries where RoHS is applicable).

 In India, although the E-Waste (Management and Handling) Rules are similar to the EU-RoHS, its implementation was restricted to only export-oriented companies and some of the multinationals (depending on their global policies) ensured that their products met RoHS directives. “It is high time that such a directive is seriously implemented for local suppliers in India, too, because the electronic waste (which includes computers, televisions, refrigerators, washing machines, etc) generated in Mumbai alone was over 19,000 tonnes in 2009. This does not include the waste generated by other products like plastics and automobiles. From this, the importance and immediate need to control the use of hazardous substances in products is understandable,” says Nainesh Dhanani (see box: India RoHS vs EU RoHS).

The Indian government, too, has become very strict now, and failing to comply with RoHS rules could result in hefty fines, an increase in the cost of the recycling and re-export of material, or the ban of a product from being exported. The director, manager or executive officer of a company will be regarded as having committed the offence. There can be indirect consequences also, like losing market competitiveness or future business opportunities, a delay in deliveries and, most importantly, the damage to a firm’s reputation.

Impact of RoHS on business
Presently, in India, the majority of electronics products are non-compliant. Therefore, RoHS rules will have a significant impact on this business in India. The electronics industry will not only need to procure components, modules and other peripheral items that do not contain restricted chemicals, but would also have to be responsible for the safe disposal of hazardous substances.

The cost of shifting to RoHS-compliant products would be quite high, but if we do not do so, in the long run India would face greater risks, economically. Sooner or later, most of the major world markets will be covered under RoHS laws. So shifting to RoHS-compliant products would also be essential to export Indian products or components to global markets.

Hence, throughout the electronics supply chain, all stakeholders would need to plan the changeover to RoHS-compliant products strategically, keeping in mind the costs and expenses involved in different processes.

The Indian electronics industry will find it very difficult to meet the parameters of the RoHS rules as the industry works on very thin profit margins. To use, produce or procure alternative safe components, modules and products will be really expensive, as extensive R&D is needed, for which companies will have to invest a great deal of time as well as resources.

Enhanced manufacturing costs: To some extent, manufacturing costs would increase due to the process changes with new materials, and the low production yields associated with the new processes. The costs would also include phasing out capital equipment used for six substances banned by RoHS rules. For example, the cost of lead-free solder is approximately twice the cost of conventional lead-based solders. RoHS-compliant materials contain costly metals like silver and gold, and also need an increased rate of recycling. Manufacturing costs would also increase due to high failure rates of lead-free components during the manufacturing process. Import costs of these components and modules are also high.

Technological knowhow: Since electronic products are very complex, making them green also requires technological knowhow, which is available in the developed countries. New technology calls for very high costs, leading to increased development and production costs. And this cost will definitely be passed on to the customers.

According to an article by Dr Sandeep Chatterjee in Global Journal of Science Frontier Research Interdiciplinary, it is estimated that the RoHS compliance cost for Indian electronic companies would be between 1.9 per cent to 5.2 per cent of annual revenues or turnover, depending on the size of the industry (large/medium/or small).

Administrative expenses, which includes costs of training and gathering information, personnel and resource expenses, etc, will go up. The companies incurred cost for material declarations from suppliers and testing components for compliance, etc. Also, certification, auditing, etc, would involve costs.

The Department of Electronics and Information Technology (DeitY) has set up the first-ever government-owned National Accreditation Board for Testing and Calibration Laboratories, which is a facility at the Centre for Materials for Electronics Technology (C-MET), Hyderabad.

New business opportunities open up
However, having said all this, complying with RoHS rules will ultimately increase the business opportunities for manufacturers as well as channel partners, as now they can compete in the global market, and their scope for exports would widen significantly.

Second, with the electronics industry now in desperate need for testing and certification facilities for RoHS compliance even for the domestic market, the scope for labs, testing centres, auditing firms and consultants will increase manifold.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine