Tirupur Project Heralds a Water Revolution in India

Photo Credit: M. C. Srikanth		Photo Credit: Don Greenberg, USAID

Over 20 years of garment sector growth in the Tirupur city in the south Indian state of Tamil Nadu had resulted in an economic boom. However, by 1990s, Tirupur was running out of water, a critical ingredient for the dyeing and bleaching firms.

Then the Tirupur Exporters Association (TEA), the Government of Tamil Nadu (GoTN) and Industrial Leasing and Financing Services (IL&FS) came together to strike a first ever public-private partnership for water supply in India – the New Tirupur Area Development Corporation (NTADCL).

Backed by a $25 million USAID loan guarantee, NTADCL raised over 1000 crore rupees in loan and equity financing. It invested this amount in an integrated water delivery system for industries in the greater Tirupur and other nearby areas, in improving Tirupur municipality's water distribution network, construction of the city's first sewerage collection system and treatment plant, and low cost sanitation facilities for slums.

Since August 2005, when NTADCL began drawing water, 120 MLD of high quality water has been available to industry at a reasonable price on a 24/7 basis. Municipalities have 65 MLD of continuous water supply available, but can only provide intermittent supply to residential customers because of constraints at the local level.

Tirupur's booming garment industry is creating jobs to meet surging global demand. According to TEA president Sanktivel, exports will grow 30% this year and will reach $2 billion by end of the decade – but without the NTADCL water export growth would be limited to 10%. There is virtually no unemployment in Tirupur and wages are well above Indian averages.

Agriculture is making a come-back. Earlier, a fleet of over a 1,000 tankers supplied industries with water drawn from boreholes as far away as 50 km from Tirupur, thus bringing down the water table to below 1,000 feet. Now, the groundwater is available for sugar cane, bananas, vegetables etc.

Tirupur residents are receiving high-quality drinking water every day, instead of having to wait for up to 10 days for poor quality water, or having to pay private vendors up to Rs. 200 per KL. Many houses will get direct connections for the first time, freeing up time for work and school, and helping prevent disease.

For the first time, Tirupur will be served by a proper domestic sewerage system. Nearby ground and surface water will no longer be polluted.

Mr. Hari Sankaran of IL&FS says: “USAID's guarantee of the $25 million 30-year bond issue was absolutely critical in raising funds and gave us the credibility to tie up the rest of the financing. Without the USAID guarantee, the project may have been delayed for years”. In addition, USAID technical assistance was critical to ensure inclusion of residential customers and to make the deal financially attractive to outside investors.

Tirupur has energized water infrastructure finance by showing that private public partnerships can deliver the goods. Over 30 deals like Tirupur are in the pipeline throughout India . An even larger private water distribution at Visakhapatnam in Andhra Pradesh, directly inspired by IL&FS, is already supplying water.