The ups and downs of India’s irrigation story | Why does India import teak? | The Daily Brief #559

0:00In today's episode, we'll do one deep

0:02dive and cover another story for the

0:04day. First, we'll talk about the es and

0:06flows of India's irrigation story and

0:08then we'll talk about the teak in your

0:10house probably not being Indian. Welcome

0:13back to the daily brief by Zeroda where

0:15we cut through the noise to help you

0:17understand what's actually happening in

0:19the most important stories from business

0:20and markets. [music] I am your host

0:22Axara. Today is Monday 28th September.

0:31Coming to the first story. So earlier we

0:34covered India's standoff with a super El

0:37Nino and it's the kind of climate shock

0:39that can knock agriculture sideways as

0:41monsoons weaken, reservoirs drain and

0:44sewing in the karif season stalls. So

0:46when that happens, everything from food

0:48prices to rural wages to RBI rate

0:51decisions start trembling. But today,

0:53while the risks still loom large,

0:55especially because of climate change,

0:57India isn't as fragile to these shocks

0:59as it used to be. In 1965, an 18%

1:03rainfall deficit wiped out 19% of our

1:06food grain production. But in contrast,

1:08in 2015, a comparable deficit shaved off

1:11just 2%. Both years saw an El Nino. Now,

1:15part of the reason behind this

1:17resilience is that we expanded

1:19irrigation. The share of India's

1:21farmland that's irrigated has risen from

1:23about 21% in 1965 to 53% by 2015. So as

1:28far as insulating our food security from

1:30the vagaries but unpredictable monsoon

1:32goes, this is the most important shift

1:35in our agriculture. But the way we got

1:37there involved some trade-offs which

1:39include the technologies we chose, the

1:41subsidies we created, and the political

1:44incentives we locked in. For one, it

1:46made us the world's largest user of

1:48groundwater by far, extracting more than

1:50the US and China combined. It also

1:53increased the energy consumed by

1:55farmers, which has for a long time being

1:57subsidized by the state. Around 11% of

2:00our groundwater assessment units are

2:02overexploited with many more under some

2:04form of critical stress. This is the

2:07first of a two-part story and today we

2:09trace how India's irrigation system was

2:11built since we became independent and

2:14how every solution created the next

2:16crisis. In part two, we look at some of

2:18the companies that work in this

2:20industry.

2:23So after independence, India went on a

2:25dam building spree. See, we needed both

2:28electricity and crop output of food

2:30security and the US provided some

2:32interesting success cases of having

2:34achieved both with multi-purpose dams.

2:37So, inspired by them, we decided to

2:39allocate huge amounts of public capital

2:41into huge establishments like dams and

2:43canal networks. The largest of them like

2:46the Bakran Nangal Dam were deemed by

2:47Javaharlal Nehu as one of the temples of

2:50modern India that would drive India's

2:52growth. The numbers were impressive on

2:54paper. Starting from a baseline of 22.6

2:57million hectares or MHA in 1951, India

3:00had created cumulative irrigation

3:02potential of about 52 mha by 1978. Plus

3:06by 1965, hydroele electricity made up

3:09over half of our electricity production.

3:11But the data hid a gap between the

3:14potential created and potential actually

3:16utilized. Now building a dam and filling

3:18a reservoir is one thing, but getting

3:21that water to a farmer's field is

3:23something else entirely. State

3:25engineering departments spent their

3:26budgets on the grand infrastructure

3:28while leaving the construction of

3:29lastmile channels to individual farmers.

3:32Small holders who could barely afford

3:34seeds were expected to build their own

3:36water courses and predictably they

3:38couldn't. Now in the pre-planned period

3:41100% of created potential was used but

3:43by the fifth plan of 1974 to78

3:46utilization had dropped to 93%. This

3:49metric was down to 77% by 2011 and that

3:5223% gap represented around 24 mh of land

3:56which is roughly the size of Uttar

3:58Pradesh. So this meant that trillions of

4:00liters of water sat impounded behind

4:02dams with no physical channel to reach

4:05fields and this has only worsened with

4:08each passing year. Meanwhile, major

4:10irrigation projects in India

4:12consistently breach their financial

4:13limits by no small margin. They average

4:16staggering cost overruns of over 1,000%

4:19and projects designed to take 15 to 20

4:21years dragged on for 15 to 20 more.

4:24Delays occurred due to land acquisition

4:26issues, environmental clearances, and

4:29scope changes. Moreover, many dams were

4:32designed around exaggerated river flow

4:34assumptions which never came to

4:35fruition. The Parkra dam, for instance,

4:37was overdesigned relative to the Sutlage

4:39River's actual flows. And even after the

4:42BS river was diverted into the

4:44reservoir, it rarely fell to capacity.

4:46There were also problems at the end of

4:48the dam where the canal network started.

4:50So farmers who were located closest to

4:52the start of the canal network often

4:54overappropriated water to grow water

4:56intensive crops like rice and sugarcane.

4:58Now once you account for this as well as

5:00seepage and evaporation, farmers who are

5:03further downstream would receive little

5:05to nothing. By the 1970s, it was clear

5:08that the dam era, while important in the

5:10broad context of India's economic

5:12ambitions, had to now give way to a

5:15different approach.

5:18The pivot came just as many other pivots

5:20do because of crisis and not just one

5:24but several following each other. For

5:26one, India had just suffered severe

5:28backto-back droughts in 1964 to 1966.

5:32And in 1972, there was also an El Nino

5:34that destroyed our monsoon and cleared

5:36up our rivers, rendering dams useless.

5:39This only increased our already existing

5:41dependence on American food imports,

5:43which was politically embarrassing. Then

5:46India was also hit by a global oil

5:48crisis and the few groundwater pump sets

5:50that we had were using diesel at the

5:52time. Now diesel suddenly became more

5:54expensive and we were also attempting a

5:57green revolution with high yielding

5:58variety seeds but they demanded precise

6:01watering that rigid canal systems

6:02couldn't prove. Now to get a better

6:05sense of how much this overlapping of

6:07crisis influenced India's development

6:09trajectory, we recommend checking out

6:11our subtext episode with energy expert

6:13Rohit Chandra. Now one solution to this

6:16urgency was tube wells. So unlike a dam

6:18that took decades to build and delivered

6:20water on a fixed rotation schedule, a

6:23tube well could be drilled in days and

6:24operated whenever the farmer needed

6:26water. Unlike large command and control

6:29projects like dams, the shift to tube

6:31wells was far more decentralized and

6:33private driven. Informal tube wellwater

6:36markets had already sprung up before the

6:38government policy caught up as richer

6:40farmers who could afford to drill wells

6:42began selling surplus groundwater to

6:44their smaller neighbors. Even today over

6:4695% of tube wells in India are owned

6:49privately. Government policy then

6:51turbocharged this trend through three

6:53moves. First the nationalization of

6:55banks in 1969 opened rural credit lines

6:58allowing millions of farmers to borrow

7:00for pumps and bwells. Second, state

7:03electricity boards were directed to

7:04electrify rural areas at scale. And

7:07lastly and most crucially, states

7:09shifted from metered electricity pricing

7:11to flat rate tariffs based on pump

7:13horsepower. Now that last move changed

7:16everything. Under flat rate pricing,

7:19once a farmer paid a small fixed fee,

7:21the marginal cost of pumping an

7:23additional liter of groundwater dropped

7:25to zero. There was no financial penalty

7:27for running the pump longer or

7:29extracting more. Within some states like

7:31Punjab and Tamil Nadu, political

7:33competition eventually drove the flat

7:35tariff to zero. Even if power for

7:37farmers isn't completely free today or

7:39is rationed by time, even if free,

7:42farmers are still the most subsidized

7:44set of consumers in the power sector. In

7:46a past survey by the International Water

7:48Management Institute, electric tube well

7:50owners under flat tariffs were found to

7:52have pumped 40 to 150% more than diesel

7:55pump owners who faced real variable fuel

7:58costs per hour. By the 1980s,

8:00groundwater had overtaken surface water

8:03as the primary source of irrigation in

8:04India while making up only approximately

8:0730% share before 1967. By 2001,

8:11agricultural tupils consumed nearly 1/3

8:13of India's total national electricity.

8:16So the tube revolution had succeeded in

8:18at least delivering food security,

8:20converting India into a net exporter of

8:22grain. And this went handinhand with the

8:25development of a national power grid.

8:27But this shift also created an energy

8:29water nexus that would prove almost

8:31impossible to untangle. And with it came

8:34two problems of its own.

8:38The first problem is the groundwater

8:40itself. So annually India extracts over

8:43240 billion cubic meters or BCM of

8:46groundwater and approximately 90% of it

8:49is for irrigation. The national

8:51extraction rate is around 60% of annual

8:53recharge which sounds manageable until

8:56you look at the state level picture. So

8:58many states extract over 50% of their

9:00groundwater every year and some like

9:03Punjab, Rajasthan and Hana have already

9:06exceeded 100%. These states extract so

9:09much groundwater annually that the

9:11monsoon rains will probably never be

9:13enough to replenish what they pumped.

9:15Now, the overexploited assessment units

9:17did improve between 2017 and 2024 thanks

9:21to recharge structures, micro

9:22irrigation, and government schemes. But

9:2561% of total groundwater recharge still

9:27comes from rainfall. So, a weak monsoon

9:30simultaneously cuts recharge and

9:32increases pumping because farmers

9:34compensate for poor surface water by

9:36extracting more groundwater. And the

9:38flat power tariff for farmers only

9:40incentivizes this further. But even new

9:43technologies don't solve this. For

9:45instance, solar powered pumps which are

9:47promoted under the PM kusum scheme may

9:49be an improvement over grid electricity

9:51in many ways. They reduce discom losses,

9:54eliminate diesel costs for small holders

9:56and work off-rid, but they also make

9:59energy truly free at the point of use.

10:01States would often manage groundwater

10:03extraction by rationing grid power for

10:05farmers. But with offgrid solar power,

10:08that constraint goes away. So a farmer

10:10with a solar pump can run it from

10:12sunrise to sunset every day extracting

10:15far more groundwater than someone

10:17waiting for an 8 hour power window. The

10:20second problem is the fiscal crisis of

10:22the electricity grid. So flat rate and

10:25subsidized power to farms has

10:26financially gutted state discoms across

10:28India which as we know already have

10:31historically run into deep losses. Farm

10:34subsidies also prevent discoms from

10:36investing in rural grid infrastructure

10:38leading to frequent outages and that's

10:40why utilities started rationing farm

10:42power to limited hours. Now these two

10:44crises feed each other. Free power

10:47encourages over extraction which

10:49depletes aquifers and bad rains only

10:51force farmers to drill deeper and

10:53install more powerful pumps consuming

10:55more subsidized power. The discoms

10:58absorb the losses.

11:01So far we've only spoken about water

11:03extraction. But what about how the water

11:06is actually delivered to crops? For much

11:08of India's irrigation history, it wasn't

11:11very efficient. The traditional method

11:13was surface flooding where water pumped

11:15from a tube well or released from a

11:16canal would flow through unlined earn

11:19ditches which were dug directly into the

11:20soil. Now these channels lost enormous

11:23quantities of water to seepage and

11:25evaporation. And once there farmers

11:27would simply flood the entire plot

11:29instead of a more targeted conservative

11:31approach along with the issue of farmers

11:33near the head of the canal taking more

11:35water than needed. This is why canal

11:38efficiency often hovers around 35 to 40%

11:40in India. Now beyond waste there was a

11:43structural problem. Constructing these

11:45networks of open channels meant cutting

11:47through private farmland, fragmenting

11:50holdings and sparking community

11:51resistance. So land acquisition became a

11:54chronic obstacle for last mile

11:56irrigation infrastructure. So the

11:58response starting in the 1990s was a

12:00shift to underground pressurized pipes.

12:03Now buried below the soil PVC and

12:05polyethylene pipes eliminated sepedge

12:07losses didn't consume farmland and

12:09allowed farmers to cultivate directly on

12:11top of the pipe route. And the adoption

12:13doubled from about 4% of farmers in 1994

12:16to 8% by 2001 and has continued

12:19expanding since. More recently, drip and

12:22sprinkler systems or micro irrigation

12:24have pushed delivery efficiency even

12:26further. So instead of flooding a field,

12:28drip systems deliver measured water

12:30directly to the plant's root zone

12:32through pressurized emitter networks. So

12:35drip gained traction first among

12:36commercial farmers in Maharashtra,

12:38Gujarat and Tamil Nadu. And recently

12:41micro irrigation equipment also received

12:43a GST cut from 12% to 5%. But that being

12:47said, improved application and delivery

12:49technologies control where and how

12:51efficiently water reaches a plant, but

12:54they do not control how much water a

12:56farmer extracts from the ground in the

12:58first place. So you can have a perfectly

13:00efficient drip system connected to a

13:02tube well that's draining an

13:03overexploited aquifer. Now the

13:06incentives for over extraction of

13:07groundwater remain unchanged even when

13:10delivery has become more efficient.

13:14India's irrigation story is at its core

13:16a story about political incentives

13:18distorting every technical solution. The

13:21earliest dams built by independent India

13:24were grand but couldn't deliver to the

13:26last mile. Tube wells treaded where dams

13:28couldn't but ended up creating a spiral

13:30whose outcome was the depletion of our

13:32groundwater reserves. Improved delivery

13:35technologies made each drop go further

13:37but left extraction ungoverned. And

13:40solar pumps offer to free farmers from

13:42the grid but don't inherently provide a

13:44check against overping. So the question

13:47for part two is a different one. Within

13:49this landscape of subsidies, aquafer

13:52stress, and misaligned incentives, what

13:54are private companies actually building?

13:57That's where we'll go next. If you

13:59prefer reading the daily brief instead

14:01of watching the video, check out the

14:02link to the newsletter in the

14:04description. Coming to the second story,

14:06walk into a furniture shop in India and

14:08ask for a dining table that will last.

14:11The shopkeeper will probably point you

14:13to teik. So teik resists rot and

14:15termites and handles moisture well. And

14:18you will find it indoors, bed frames and

14:20cupboards. But the tree it came from may

14:22have grown a very long way from India.

14:25It may have grown in Colombia, Ecuador

14:27or Ghana. So teak is native to India and

14:30we hold roughly a fifth of the world's

14:32natural and planted teak area. Yet we

14:35buy an extraordinary amount of it from

14:37overseas. In 2022, India accounted for

14:40about 97% of internationally reported te

14:43roundwood imports by volume. So

14:45roundwood simply means unprocessed logs.

14:48We imported more than 950,000 cubic

14:51meters of teak logs worth about $292

14:54million that year. Now part of the

14:57explanation lies in how we manage

14:59forests and the rules farmers face when

15:01growing trees for sale. Now Maharashtra

15:03tried to ease one of those rules in June

15:052026 only for a code to pause the

15:07change. But first it helps to understand

15:10what made overseas te such a good fit

15:12for Indian buyers.

15:16So te's natural range stretches across

15:18parts of South and Southeast Asia.

15:20growers introduced it to Africa and

15:22Latin America and established

15:24plantations which are trees deliberately

15:26planted and managed to produce timber.

15:28So Latin America had only about 33,000

15:31hectares of teak plantations in 1995.

15:34That area has grown many times over

15:36since creating a source of timber just

15:38as Indian buyers were looking beyond

15:40their traditional suppliers. Now India

15:42had long bought mature Burma te from

15:45Myanmar. But West African te was already

15:48reaching India in the 1990s well before

15:50Myanmar banned raw log exports in 2014

15:53and the ban reinforced a shift that was

15:55already underway. Today most of India's

15:58imported de logs come from Latin America

16:00and Africa. Colombia, Ecuador and Ghana

16:03supplied about 2/3 of its de groundwood

16:05imports in 2022 and other major sources

16:08included Panama, Brazil, Costa Rica, Ben

16:11and Nigeria. Now these plantations

16:14offered a different kind of log.

16:16Conventional Indian tea plantations

16:18often follow harvest cycles of 50 to 80

16:20years to produce larger timber and many

16:23overseas growers harvest after roughly

16:2520 to 30 years accepting smaller younger

16:27logs. This is a difference in how trees

16:30are managed and when they're cut. Indian

16:32plantations can also follow shorter

16:34cycles. Now Indian mills are

16:36particularly good at using these thinner

16:38logs including sizes some processors

16:40elsewhere would reject. So that gave

16:42overseas growers a ready market.

16:46Now supplying that market from within

16:49India is more complicated. RT comes from

16:52natural forests, plantations and private

16:54farms. But those sources serve different

16:57purposes and face different roots. So

16:59much of India's natural teak is in

17:01government managed forests and these

17:03forests protect habitats as well as

17:05supply wood. So harvesting follows

17:07forest management plans that limit where

17:09and how much can be cut. Public

17:11plantations are deliberately planted and

17:14may be managed for timber production but

17:16their harvests are also planned. So a

17:18large area under te does not tell us how

17:21much wood is available to buy in any

17:23given year. Now the global teak

17:25assessment records about 1.69 million

17:27hectares of public te plantations in

17:29India. Privately grown te adds to that

17:32resource but its area and harvest are

17:34poorly measured. That makes it difficult

17:36to put a reliable figure on the

17:38country's total production. Now for a

17:40mill the practical problem is getting a

17:42steady supply. Buying from scattered

17:45farms means finding sellers, checking

17:47individual trees and arranging harvests

17:49and transport. Overseas plantations can

17:52supply fairly uniform logs in bulk on a

17:54regular schedule and Indian mills

17:56already have the skills to process

17:58younger timber. So imports offer an

18:00organized way to keep it coming.

18:04Now more tea grown on farms could help

18:07fill that gap. But the decision looks

18:09different from a farmer's side. Even the

18:11shorter plantation cycle means waiting

18:13two or three decades for the main timber

18:16harvest. Now farmers can grow other

18:18crops between young teak trees while

18:20there's enough light and space. But

18:22still growing teak means committing land

18:24and money for years before most of the

18:27return arrives. And then comes

18:29permission to harvest. So felling and

18:31transport rules for farm grown timber

18:33vary by state. In Maharashtra, one of

18:35India's major tea growing states, teik

18:37was listed under the Maharashtra felling

18:39of teas regulation act 1964. So on land

18:42covered by that law, cutting a teak tree

18:45required written permission from a

18:46forest official and moving the wood

18:48required a separate transit permit and

18:51owning the land did not by itself mean a

18:54farmer could harvest the tree whenever

18:55it was ready. Now the Union Environment

18:57Ministry has acknowledged that difficult

18:59felling rules discourage farmers from

19:01growing timber and has urged states to

19:03simplify them. Farmers also have to

19:06consider the quality of seedlings,

19:08access to credit, uncertain prices, and

19:10the difficulty of finding buyers. For

19:12someone making such a long investment,

19:15uncertainty about the eventual sale is

19:17another reason to hesitate.

19:21That was the requirement Maharashtra

19:22tried to remove on 9th June 2026. So the

19:25state took teik off the list of trees

19:27requiring prior felling permission under

19:29its 1964 act and senior forest official

19:32said the existing rule had discouraged

19:34planting on private land. Now te had

19:37been added to the list in January 1968

19:39and the state was reversing a

19:41restriction nearly six decades old.

19:43Transit permits would still be needed to

19:45move the wood, but conservationists

19:47worried that removing the check before a

19:49tree was cut would make it easier to

19:51pass illegally felt forest take off as

19:54farm timber. Illegal teak felling has

19:56been reported in Maharashtra. So that

19:58concern needs to be taken seriously. On

20:0119th June 2026, 10 days after the

20:04change, the Bombay High Court's

20:05Orurangabad bench put the notification

20:07on hold. The court had taken up the

20:09matter on its own and its interim order

20:12meant the earlier felling requirement

20:13continued to apply.

20:17Now demand fatigue doesn't disappear

20:19because supplying it locally is

20:20difficult. Furniture makers still need

20:23wood and overseas plantations are ready

20:25to sell it. India's $292 million T-Clog

20:29import bill in 2022 shows the size of

20:31that business. Though rules alone do not

20:34explain it. Protecting natural forests

20:37matters, but farmers also need a clear,

20:40workable route to harvest trees they've

20:41grown for sale. Registering plantations

20:44and tracing timber back to its source

20:46can help distinguish farm grown wood

20:48from illegal forest timber. And that

20:50gives regulators a way to check where

20:52the wood came from while making a legal

20:54harvest easier. But easier rules would

20:56take years to translate into more

20:58timber, and growers would still need

21:00good seedlings, finance, and buyers. But

21:03those investments become harder to

21:05justify if the eventual right to harvest

21:07remains uncertain. India has the tree,

21:10the buyers and the mills. So giving

21:13farmers confidence that they can grow,

21:15harvest and replant tee responsibly

21:17would give them a reason to supply more

21:19of that demand themselves. Now coming to

21:22the tidbits. One, Inox Clean Energy is

21:25preparing to file draft papers with Sebi

21:27for a rupees 10,000 cr initial public

21:29offering targeting a valuation of around

21:31rupees 1 lakh cr. The fresh proceeds are

21:34expected to fund acquisitions and reduce

21:36debt as the company expands its

21:38renewable power and solar manufacturing

21:40businesses. Two, the Securities and

21:42Exchange Board of India SEBI has

21:44approved the portfolio managers route

21:46for investing in mutual fund units or

21:48PRIM. The new framework allows portfolio

21:50managers to invest client funds into

21:52direct mutual fund plans, exchange

21:54traded funds and specialized investment

21:56funds or SIFS requiring a minimum

21:58investment ticket of rupees 25 lakh.

22:01Three, Bentley has unveiled the TCAL,

22:03its first fully electric model, joining

22:05Ferrari in bringing battery powered

22:07vehicles to the ultra luxury automotive

22:09market. Ferrari's first electric

22:11vehicle, the 550,000

22:13Luch was unveiled earlier this year.

22:16Four, the Adani Group has announced

22:18plans to invest over rupees 1 lakh cr in

22:20West Bengal by 2035 across sectors

22:22including ports, logistics, power

22:24generation, and hypers scale data

22:26centers. The road map includes an

22:28immediate rupees 4,000 cr comm

22:29commitment to build a 2,000 bed

22:31multispety hospital and medical college

22:33in Kolkata's new town. Five, the food

22:36safety and standards authority of India

22:38has issued draft rules barring products

22:40made from non-milk ingredients from

22:41being manufactured or sold as paneer. If

22:44finalized, existing analog products

22:46would also be required to drop the term

22:48from their names, labels, and marketing.

22:50That's all the news I have for you.

22:51Thank you so much for watching and see

22:53you in the next one. Disclaimer. This

22:56content is forformational purposes only.

22:58None of the stocks, brands, or products

23:01mentioned are recommendations or

23:02endorsements.