On the 20th of November 2020, the National Green Tribunal issued a final order that most of India's manufacturing sector never heard about. It concerned charcoal. Specifically, coconut shell charcoal — the black, dense, high-carbon material that serves as the essential raw material for India's activated carbon industry, and increasingly for its steel sector.

The order was simple in its language and devastating in its effect: all charcoal manufacturing units operating in Tamil Nadu and other southern states were directed to shift to above-ground continuous process technology. They were told not to operate until they did. The design of the new process had to be approved by either IIT Madras or Anna University.

Almost overnight, India's biochar supply chain collapsed.

How it Worked Before

For centuries — and certainly for the past several decades in Tamil Nadu — coconut shell charcoal was made the same way: in earthen pits.

The pits were dug below ground level, typically around three metres in diameter and four-and-a-half metres deep, lined with brick. Coconut shells — procured from copra oil mills across Kangeyam Taluk in Tiruppur District — were loaded in batches and ignited. The process was straightforward: partial combustion, or pyrolysis, in a low-oxygen environment. Each cycle took approximately 72 hours.

But the process had a fundamental pollution problem — two of them, actually.

The first was atmospheric. During pyrolysis, approximately two-thirds of the calorific value of the coconut shells escaped as volatiles — CO, CO₂, oily substances, and particulate matter. These were vented, often poorly controlled, into the surrounding air. The smell and smoke were pervasive. Residents who lived near production clusters had complained for years.

The second was hydrological. At the end of each 72-hour cycle, the red-hot charcoal inside the pit — at temperatures approaching 1,000°C — had to be quenched with water to stop combustion. That water, now saturated with dissolved organics, phenolic compounds, and high concentrations of chemical oxygen demand (COD), was often disposed of on land. It leached into the groundwater.

The Protest That Started a Decade of Legal Battle

In October 2012, the residents of Veeranampalayam Panchayat had had enough. A public protest forced the Tamil Nadu Pollution Control Board (TNPCB) to act. A committee was constituted to inspect units and direct them to install air pollution control systems — common hoods, scrubbers, tall chimneys, and impervious tanks to collect and recycle quench water.

The National Green Tribunal constituted its own expert committee in October 2013 to find a permanent solution. What the committee found was stark: virtually every unit was using partial underground pit carbonization. The pollution control measures in place were minimal. Quench water samples showed very high concentrations of organics and phenolic compounds.

"The two pollution sources from the coconut shell charcoal units are the emissions during the carbonisation process and the potential for groundwater contamination by the residual quench water/scrubber effluent, if disposed on land."

The committee's recommendation: no new units to be permitted until an above-ground pyrolysis design was proven feasible. Existing units that had obtained TNPCB consent might continue, provided they adopted the recommended pollution control measures.

But the industry pushed back. Units argued that above-ground chambers were unsafe — there had been explosions and accidents. The heat retention required for the process, they said, could not be achieved above ground. The case dragged through the NGT for seven years.

The Order That Changed Everything

On 20 November 2020, the NGT disposed of the applications with a final direction. The language left no room for interpretation:

The deadline for switching to continuous process manufacturing had technically been 1 April 2020 — before the order was even issued. The TNPCB issued a Circular Memo on 7 March 2022, directing all Joint Chief Environmental Engineers and District Environmental Engineers to ensure strict compliance. Anna University's Centre for Environmental Studies issued its vetted design guidelines in February 2022.

The message was unambiguous: operate with the new above-ground continuous process design, approved by IIT Madras or Anna University, or do not operate at all.

What Happened to Supply

The problem was that almost no one had the new technology.

The above-ground continuous process for charcoal manufacturing was not a mature commercial technology in India. A handful of units had attempted it; some had experienced operational difficulties. The TNPCB and Anna University had provided design guidelines, but guidelines are not the same as a proven, operating plant.

The result was predictable. Compliance was uneven, enforcement was proceeding, and a significant portion of the traditional supply — from the mud-pit units that had operated for decades — was no longer legally operating. The supply collapsed.

The demand did not.

India's activated carbon manufacturers — who depend on high-grade coconut shell charcoal as their primary feedstock — continued to operate. Their buyers continued to need activated carbon for gold recovery, water treatment, pharmaceutical applications. India's steel companies, under growing pressure from the Carbon Border Adjustment Mechanism in Europe, were actively looking for bio-based coke substitutes.

The gap between supply and demand widened. Import substitution opportunities emerged. And the premium for reliable, documented, NGT-compliant supply became significant.

Why This Is a Structural Event, Not a Temporary Disruption

This is the critical point that most observers miss. The NGT order did not create a temporary shortage that traditional producers can recover from by adding scrubbers and tall chimneys. It mandated a fundamental change in production technology — one that requires new capital, new design expertise, and regulatory sign-off from IIT Madras or Anna University.

The artisanal producers who have operated mud-pits for thirty years cannot simply pivot. The technology they would need to adopt requires engineering capabilities they do not have. The compliance pathway is real but requires significant new investment and institutional validation.

This means the structural supply gap will persist. New compliant entrants — those who have the technology already validated, the regulatory understanding already in place, and the operational track record already established — are not competing with legacy producers. They are replacing a category.

Where Susstains Stands

I should be transparent: I am the founder of Susstains Engineering Solutions, and this article makes the case for why the market we operate in is the right one to be in. The reader should weigh that accordingly.

But the facts are the facts. Our commercial plant in Tumkur, Karnataka is an above-ground, zero-smoke, continuous process charcoal production facility. The process was developed over a decade of research at IIT Madras — the same institution named in the NGT order as the approving authority. Our first published paper in 2023 documented the URC-FD (Ultra-Rich Carbonization through Flash Devolatilization) process that achieves 34.2% biochar yield at 10× the production rate of the traditional mud-pit method, with no visible smoke emissions.

My co-founder Karthik ran a traditional pit-method charcoal operation in Tamil Nadu. It was shut down under the NGT order. He brought that operational knowledge into Susstains — and we built the compliant alternative.

The question investors ask us is whether the demand is real. The answer is that the demand was always real — it was the supply that broke. We are rebuilding the supply chain, on the right side of the law, with technology that the NGT itself called for.

The supply chain is broken. The demand is real. The window for building the replacement is open right now — and it will not stay open indefinitely.

Muthu Kumar K is the Founder & CEO of Susstains Engineering Solutions LLP, and holds a PhD in Aerospace Engineering from IIT Madras (PMRF). He is the inventor of two granted patents in biochar and activated carbon synthesis. Susstains is expanding its plant network across South India. Write to muthu@susstains.com or visit www.muthukumark.com.

Every tonne of coconut shell biochar starts long before it reaches a furnace. It starts on a farm, or in a household backyard, and moves through a chain of merchants, trucks, and collection yards that most people outside the industry never see. Having sourced coconut shells across Tamil Nadu, Kerala, and Karnataka for over a decade, I've watched this chain work — and it works very differently depending on which state you're in.

Tamil Nadu: A Bulk Merchant Model

In Tamil Nadu, the supply chain is built around merchants rather than farmers directly. Merchants procure coconuts from farmers roughly every 50 days. They remove the husk, split the coconuts in half, dry them, and extract the dried kernel — the copra — which is sold on for oil production. The shells left behind are collected and stored in the merchant's own yard.

Within about a week, a medium-scale coconut merchant will typically accumulate five to ten tonnes of shells. Once roughly ten tonnes have built up, the lot is sold on to charcoal manufacturers or to shell traders who supply charcoal producers. The major harvesting season in Tamil Nadu runs from January to May.

A significant share of the shells collected in Tamil Nadu doesn't stay in-state — it is transported into Karnataka for charcoal production, for reasons that come down to licensing, which I'll get to below.

Karnataka and Kerala: A Household-by-Household Network

Karnataka and Kerala work on a completely different rhythm from Tamil Nadu, and the collection pattern in both states is broadly similar. Farmers harvest their own coconuts every 50 to 60 days and store them — not shelled — in mesh containers typically divided into three compartments. The coconuts sit in storage for around ten months to a year, until the water inside the kernel has fully dried.

Only once the water has dried do farmers de-husk the coconuts, usually with their own labourers if they farm at scale. The shell is removed, and the copra — known locally as ball copra — is sold at the coconut mandi, largely destined for north India ahead of festival seasons such as Ganesh Chaturthi, Navratri, and Diwali. This is why the harvesting season in Karnataka and Kerala runs July to November, opposite to Tamil Nadu's.

A collection yard near Tumkur, where a loader consolidates shells gathered by small truck merchants from across the surrounding hubs.

It's a fundamentally more fragmented, labour-intensive model than the bulk-merchant system in Tamil Nadu — every shell effectively has to be found, rather than simply accumulated in a merchant's yard.

Why Shells Cross State Lines

The reason a meaningful volume of shells from both Tamil Nadu and Kerala ends up in Karnataka comes down to licensing. Charcoal production in Karnataka is done largely through the artisanal method, and Karnataka's pollution control board issues licenses for artisanal production. Neither Tamil Nadu nor Kerala grants such licenses — most artisanal-method production that still happens in those states operates outside the legitimate licensing framework, aside from a small number of companies using modern technology.

Because Karnataka is willing to license artisanal charcoal production, producers based in both Tamil Nadu and Kerala transport their coconut shells into Karnataka to convert them into charcoal there, legally. That added transport cost is passed through to the raw material price — coconut shells typically cost about ₹2 per kg more in Karnataka than in Tamil Nadu or Kerala as a direct result.

What This Means for a Compliant Producer

Understanding this chain in detail — who holds material at each stage, when the harvest seasons peak in each state, and why the artisanal licensing gap pushes volume into Karnataka from both neighbouring states — is what lets us plan sourcing and pricing with real visibility, rather than reacting to spot shortages. My decade of relationships across these merchant and collection networks in Tamil Nadu and Karnataka remains one of the more difficult parts of this business for a new entrant to replicate quickly.

Karthik Kumar is the Co-Founder & COO of Susstains Engineering Solutions LLP, responsible for raw material sourcing across Tamil Nadu and Karnataka. Susstains is expanding its plant network across South India. Write to muthu@susstains.com.