Kickstarting Circular Economy System in India

With the Covid-19 pandemic refusing to mitigate, Indian economy finds itself at a cusp…on one side there is the path that successive governments have taken to make the country stronger economically and on the other side is to think outside the square and have the courage to make some bold decisions that have impact on generations to come in terms of sustainability.

A few facts to consider first: India will be the most populous nation in the world by overtaking China in the next few years. This is guaranteed to put pressure on local resources in India across the board. While Europe recycles 70% of its consumption items, India recycles only 20%. Of the 62 million tonnes of garbage generated in the country annually, 45 million tonnes go untreated. With landfills in major cities brimming over and an annual growth rate of trash at 4 per cent, it is believed that by 2030 we could face a severe garbage crisis.

Of the dry waste generated in urban areas, paper accounts for 50 per cent, followed by plastic (14 per cent), glass (6 per cent), textile (5 per cent), wood (3 per cent), metal (1.5 per cent) and residue (20 per cent). And it is this dry waste that could be turned into a resource if waste management is taken seriously, decentralised and micro-managed involving local citizens, traditional rag-pickers and the larger community. Besides this, e-waste collection and recycling of plastic hold great potential for a robust circular economy — one that closes the loop on ‘reduce, recycle and reuse’.

India is also the third highest emitter of greenhouse gases, and accounts for 9.2% of total world emissions. Given that India aspires to become a global manufacturing hub, we would witness higher levels of consumption of raw materials, than what’s required to meet India’s domestic needs. Therefore, chances are that India’s current straight line economic approach will cause severe ecological damage with disastrous economic and social ramifications.

This is the best chance that India may get in decades to kick off a robust circular economy program. For the uninitiated, a circular economy is system that  aims at eliminating waste and continual usage of resources by focusing on reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a close-loop system (hence the word – circular).

Given that India currently recycles only 20% of its consumption, there is enormous scope for improvements in this area, and this provides opportunity for innovation and employment. Hence the journey from the current linear economic model to a circular economic model is filled with both ecological and economic benefits. According to the Ellen McArthur foundation, transitioning to a circular economy will result in US$ 624 billion in economic benefits, and reduce carbon emission by 44% (compared to current development path) in 2050 alone. As part of the sweeping economic reforms announced in the wake of the COVID-19 pandemic, the national government, in coordination with the state governments, must develop a roadmap for institutionalising a circular economic growth model for the nation.

The journey towards building a circular economy needs a multi-pronged approach requiring the engaged participation of governments, industry and citizens. It needs a robust roadmap jointly owned and executed by the central, state, city and other local governments, and it must focus on the following aspects:

  • Citizen awareness and source segregation — across the entire population
  • Educating the young — making it compulsory to educate our students at all levels about the need for circular economy
  • Tax incentives and financing — to make investments in circular economy more financially viable
  • Industry specific roadmap — to enable transition to circular economy based business and operating models in key industries
  • Technological innovation — in technologies that make circular economy possible and viable
  • Policy roadmap and coordination — between the national government, state governments, city governments, and industry


Circular economy has the potential to generate 14 million jobs in next 5-7 years and create thousands of new entrepreneurs, feels Niti Aayog CEO Amitabh Kant. A 2018 report of FICCI says that “half-a-trillion dollars of economic value can be unlocked” through circular economy business models by 2030 in India. The Ellen MacArthur Foundation’s 2016 study too offers a positive direction. It says: “A circular economy development path could significantly mitigate negative environmental externalities. For example, greenhouse gas emissions could be 23 per cent lower in 2030 and 44 per cent lower in 2050 compared with the current development scenario, helping India deliver on its targets promised in the recently ratified Paris Agreement.”


While the lockdown continues to cause significant economic slowdown, people in cities such as Jalandhar and Saharanpur could catch a glimpse of the Himalayan ranges after many decades due to reduction in air pollution. It was during the last three decades that the Indian economy registered significant growth, and this clearly establishes the unsustainable inverse relationship between ecological and economic welfare. Circular economic model of growth offers India the roadmap for making ecological and economic welfare complement and sustain each other. Many progressive cities and nations have embraced the strategic push towards building a circular economy. With many sweeping reforms being proposed to reverse the economic impact of the COVID-19 pandemic, it’s imperative that ecological welfare is not sacrificed at the altar of economic growth. Now is therefore the right time for institutionalising circular economic growth trajectory, such that it not only becomes a way of life across India’s economic spectrum, but also adequately prepares us to leverage its benefits as our population and per-capita consumption surges to unprecedented levels.

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