India's Circular Economy: A strategic shift for sustainable growth

India’s economy has increased tenfold in the last three decades and is projected to be the third largest, with a GDP of $7.3 trillion (Dh26.81 trillion) by 2030. However, this economic growth has also led to an unprecedented increase in its annual material consumption, which grew from 1.18 billion tonnes in 1970 to 7 billion tonnes in 2015 and is projected to reach 14.2 billion tonnes by 2030. As India strives to become a Viksit Bharat, a developed economy, by 2047, it must restructure its growth model to a more resource-efficient one by embedding circular strategies. This shift is not an environmental but an economic imperative that boosts jobs, growth, and sustainability.

A study by the Council on Energy, Environment and Water (CEEW) finds that recycling in four sectors alone in Odisha could be a $1 billion market opportunity in 2030 and could create more than 30,000 jobs. This opportunity would grow tremendously as we expand the focus to other circular strategies such as design, repair, and reuse across sectors and states.

To its credit, India is among the few countries that regulate different types of waste, including some emerging streams such as solar modules and batteries for electric vehicles.

However, these regulations currently focus on waste management by providing targets for recycling and have no incentive for private companies or consumers to reduce waste generation through improved product design, longer life, or choosing products with lower life cycle emissions.

Then there is also India’s Mission LiFE (Lifestyle For Environment), which promotes sustainable practices but needs binding mandates for manufacturers or consumers. This lack of synergy across missions can hinder the shift towards circular business models and conscious consumption.

On the other hand, recyclers are not investing in advanced recycling technologies that allow the recovery of high-purity materials or have low emissions. Like other sectors, such as clean energy manufacturing, our recycling industry is also plagued by imports. Aiming for quick turnarounds, recyclers across waste streams such as plastic, municipal solid waste, textile, electronics, and solar modules are importing most of their machinery for different stages of recycling and processing and not investing in indigenous machinery. This creates several issues for the sector.

First is on performance. Due to a lack of segregation of waste across the supply chain, recyclers or processors do not receive the optimum quality and quantity of waste. This affects the machine’s performance and therefore the recyclers’ revenues, as they cannot recover what they intended.

Second is reliability. There have been instances where machine breakdown could take months to repair, as the technicians and spare parts are called from abroad.

These trends require a more coordinated approach across regulations that will send clear signals to the private sector and advance circularity for sustainable growth. Three primary mindset shifts are necessary here.

First, environmental regulations must prioritise value creation over remediation, incentivising recyclers and boosting producer and consumer accountability. Limited accountability of these actors often leads to easier and cheaper methods like open dumping due to minimal fear of penalties. Over the last few years, the Indian government has revised several waste management regulations to expand their scope, increase Extended Producer Responsibility (EPR) targets, and improve monitoring. However, they need to move from a barrier to an enabler to scale circularity.

As a first step, the Ministry of Environment, Forest and Climate Change (MoEF&CC) should introduce an EPR framework for all materials used across sectors. This step would complement the efforts of the National Critical Mineral Mission, which aims to strengthen India’s value chain of the 30 critical minerals. It will also incentivise recyclers who can recover all materials from a product, but currently have little motivation to do so. EPR should also mandate manufacturers to use recycled materials in new products. This provision is already there in plastic and battery, but is missing for electronics, end-of-life vehicles, and many more.

Other ministries incentivising domestic manufacturing, such as the Ministry of New and Renewable Energy (MNRE) and the Ministry of Heavy Industries, must complement this effort by integrating these requirements for manufacturers to win public bids. To finally close the loop, MoEF&CC should also set procurement mandates for bulk consumers to use products with recycled material content, with incremental targets.

Procurement by bulk consumers will create a sustainable demand for such products, thereby incentivising manufacturers. India’s construction and demolition waste management is a successful example of this approach, where local and development authorities are mandated to use recycled materials in construction, reconstruction and road construction.

Second, each actor in the waste supply chain should strengthen procurement and operations by introducing Key Performance Indicators (KPIs). This will improve transparency, traceability, and efficiency across the entire supply chain and guarantee the right quality and quantity of waste flows throughout the waste value chain.

While central ministries can play a key role in bringing out advisories for setting such KPIs by collating them from the successful case examples, local institutions such as urban local bodies will need to incorporate and implement them in the contract agreements, and the recyclers and waste processors will need to ensure they meet these KPIs for timely payment. Surat Smart City Development Limited is using this approach for solid waste management in the city.