Circular Economy for Sustainable Development in India

Introduction
With the world’s largest democracy with influencer status in the global mindscape, various social and environmental factors, including population increase, political unrest, food and water scarcity, rapid urbanization, environmental pollution, and climate change, have coexisted in India. However, India is progressing towards the United Nations (UN) Sustainable Development Goals (SDGs) “Agenda 2030” commitment, from 18% waste processing in 2014 to 70% in 2021. The current disruptive changes lead to an urgent call for action to strategize development and spur economic growth while tackling climate change and building future programs for waste management and resource preservation. The circular economy encourages a transition from linear 'take-make-waste' to multi-life cycle circular value chains in business models, integrating the design-thinking approach for more effective and judicious use of resources. Currently, almost 377 million citizens reside in urban areas, producing 55 million tonnes of municipal solid waste (MSW) annually. Moreover, this amount is predicted to increase significantly, reaching 125 million tonnes annually by 2031. Despite the immense relevance of the circular economy, the industry currently has a varied awareness of the concept, which poses a significant challenge concerning its widespread adoption in India. It is estimated that by 2050, India would reap yearly benefits of US$ 624 billion (Rs 40 lakh crore) reducing the negative externalities.

Circular Economy in India
Circular Economy aims to eliminate all forms of junk from the market, where “junk” refers to any inefficient utilization of resources or assets. It is a restorative approach to production and consumption that involves redesigning, recovering, and reusing products and materials to reduce environmental impacts. Circular models seek to eliminate four different kinds of waste that are as follows:

• Wasted Resources - Materials and energy that cannot be effectively recycled over time
• Wastage Capacities - Products and assets that are underutilized
• Wasted Lifecycles - Products that prematurely end due to planned obsolescence or a lack of second-life options
• Wasted Embedded Values - Components, materials, and energy not retrieved from waste streams

The transition to a circular economy could result in an additional US$ 4.5 trillion in global economic output by 2030. Moreover, in contrast to the current growth environment, India's circular economy development route might generate an annual value of US$ 218 billion (Rs 14 lakh crores) by 2030 and US$ 624 billion (Rs 40 lakh crores) by 2050. The implementation of a circular economy in India would require an enabling ecosystem that encourages the identification and adoption of new business models. Presently, 377 million people living in urban cities, produce approximately 55 million tonnes of Municipal Solid Waste (MSW) (like organic waste, recyclables like paper, plastic, wood, glass, etc.) per year, with these numbers expected to skyrocket to 125 million MT per year by 2031. Moreover, only 75-80% of the MSW gets collected; out of which only 22-28% is processed, and the rest is dumped in dump yards. MSW generation is projected to increase to 165 million tons by 2031, and further rise to 436 million tons by 2050.

By 2030, India is expected to be the world's third-largest economy, accounting for approximately 8.5% of the global GDP. The circular economy has the potential to fuel India's growth while also providing significant environmental benefits, making a sustainable and resilient framework. The recycled Polyethylene Terephthalate (PET) plastic industry in India is estimated to be worth around US$ 400-550 million, according to National Chemical Laboratory (NCL) and PET Packaging Association for Clean Environment (PACE). In India, PET is recycled at a rate of 90%, which is higher than in Japan (72%), Europe (48%), and the United States (31%). Thus, there are enormous opportunities for a circular economy in India. The country is likely to be:

• Leading hub for technology and innovation
  With its existing IT dominance and pool of tech talent, India is well-positioned to use digital technology to create innovative and cutting-edge circular businesses. This has the potential to accelerate India to the forefront of the global circular economy revolution.
• Early success compared to global economies
  India is one of the fastest developing economies and can easily take up opportunities to use circular methods of production, building sustainable designs. As mature economies have a linear lock-in and switching costs would be costly and time-taking. Therefore, as an emerging nation, India has a competitive advantage over mature economies.
• Easy acceptance of circular products
  Several circular aspects are ingrained in Indian mindsets like vehicle over-utilization and repair or extensive recovery and recycling of post-use materials at the household level. For instance, the average length of car ownership in India is 9-12 years, as compared to 7-8 years in the US. Thus, this widespread cultural acceptance makes India a larger marketplace.
• Cost-centric Market
  The cost of providing services to consumers will be cheaper for those who would take the circular path than that of the traditional take-make-waste model. Incorporating circular practices in India could result in US$ 624 billion in savings across construction, food and agriculture, and mobility by 2050. This will contribute to widespread adoption, particularly among India's cost-conscious consumers.

Business Models
Circular Economy business models are classified into five different types of models that companies can leverage individually or in combinations to improvise resource productivity in innovative ways to lower costs, enhance customer value, increase revenue, and differentiate. Below are the five consumer-focussed business models are as follows:

• Circular Supply Chain
  Materials that are fully renewable, recyclable, or biodegradable and can be used across lifecycles. For example, switching from a fossil-fuel-based energy source to a renewable energy source. Companies can develop and market circular supplies such as renewable energy and recyclable materials through their upstream or downstream partners, or they can produce circular supplies for their operations. Some businesses are deploying technical nutrients, which are inputs such as metals and minerals that can be reused and recycled indefinitely if not contaminated or leaked along the value chain.
• Recovery and Recycling
  This model enables organizations to extract value from the waste stream (end-of-life products, waste products/by-products), effectively eliminating the concept of waste. Recycling, refurbishment, and restoration initiatives can help businesses recover value from end-of-life products. Businesses can also disassemble waste products to recover residual value in the form of valuable material. To aggregate waste streams at scale, the model frequently involves organizations to establish reverse supply chains. They can be transformed by recycling, upcycling (converting old products or materials into something more valuable), industrial symbiosis (sharing by-product resources among industries), downcycling (converting products to something of lesser value), and cradle-cradle design is then used to transform the same (disposed products are reprocessed without any resource loss).
• Product Life Extension
  Consumers discard products that they no longer value as they are broken, out of style, or no longer required. However, many of these products retain significant value by just being maintained, or improved through repairs, remanufacturing, or remarketing. Companies can act as industrial manufacturer which produces these goods with extended life cycles.
• Sharing Platform
  It aims to link two or more parties to increase net asset utilization through co-access. The model typically makes use of digital technologies to create new relationships and business opportunities for consumers, businesses, and microentrepreneurs who rent, share, swap, lend, or barter their idle goods. As a result, this business model offers consumers a new way to make and save money while also providing organizations with an asset-light business opportunity.
• Product as a Service
  Consumer behaviour is shifting toward an "access-over-ownership" mindset. This model requires manufacturers and retailers to bear the total cost of product ownership while providing it as a service to customers. Customers become more product users than product owners. It's a win-win situation for both companies and customers to derive a new revenue stream, while customers benefit from significant cost savings, exceptional performance & quality, and reduced risk of ownership.

Case Study (Sustainable Packaging) - TATA Salt Brand (India)
Tata Chemicals’ consumer products division require 4,000 tonnes of multi-layer plastic film annually for packing its products. This multilayer plastic is difficult to recycle and most of it is dumped in landfills, causing emissions, and impacting the environment. Biodegradable and recyclable packaging materials were investigated as part of the company's sustainability initiative. The challenges like the limited availability of 100% biodegradable packaging material and proper segregation and specific conditions to decompose, render this option commercially unviable. The packaging team then closely collaborated with Dow Chemicals to develop a PE (Polyethylene) based film that could meet the same print quality and other technical specifications as the PET, used in the existing packs. The newly created recyclable pack is an adhesive laminate, made of the same polymer (PE-PE) as the existing packs and has comparable aesthetics and shelf life. Since the laminate is constructed of a single polymer, recycling organizations are effectively composing the laminate. Therefore, the single polymer structure makes the pack more readily recyclable by transforming it into energy through a range of processes such as combustion, gasification, pyrolysis, anaerobic digestion, and landfill gas recovery.

Impact of Initiative
This project positively impacted the company by attracting new investors, accelerating revenue growth, and increasing environmental awareness between consumers and the market. Embedding recyclable packs in advertisements and campaigns will leverage the existing brand equity. It would also reduce the risk of non-compliance per the government’s plastic waste management rules. This initiative would positively contribute to the country, to the environment, to the local people, and to the brand.

Funding Landscape in India
Even though the circular economy in India is at a nascent stage, it has attracted investments of US$ 1.8 billion during the period 2016-21. Mitigation-oriented innovations in energy and transportation, account for over 60% in terms of volume and 80% in terms of deal value. This is consistent with the popularity of energy and mobility start-ups worldwide. The significant technological and commercial progress, favourable policy environment, and the evolution of standardized frameworks have bolstered the adoption of a circular economy in the last decade. Funding rise is a positive trend given that these industries account for a significant portion of the world's GHG (Greenhouse Gas) emissions (more than 70%).

On the other hand, India is still expanding in areas like smart agriculture, waste, environment, and natural resources, which offers a huge potential for innovation in the circular economy.

Source: Kalaari Capital

Government Initiatives

E-Waste Management Policy

Source: NITI Aayog

Other Policies

• Plastic Waste Management (Second Amendment) Rules, 2022
  The Union Environment Ministry has launched this policy to mandate to increase in the thickness of plastic carry bags to over 120 microns starting on December 31, 2022, and the phase-out of some single-use plastic products starting on July 1, 2022.
• Swachh Bharat Mission - Urban 2.0 (SBM-U2.0)
  It aims to achieve the objective of safe sanitation in urban areas by making all cities "Garbage Free," guaranteeing grey and black water management in all cities besides those covered by Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and making all urban local bodies open defecation free (ODF+) and those with a population of less than 1 lakh as ODF++. In order to effectively manage solid waste, the mission will concentrate on source segregation of trash, using the 3Rs (reduce, reuse, recycle) as a guideline, scientific processing of all sorts of municipal solid waste, and repair of former dumpsites. The estimated cost of SBM-U 2.0 is 1.41 lakh crores.

The Road Ahead
India's rapidly evolving market and high potential for development can provide a competitive advantage over mature economies. The aspirational long-term vision of a circular economy is based on the current strengths of the Indian market and the integration of diverse stakeholders that has the potential to pave the way for fast-tracked sustainable, and resilient prosperity. Circular economy advancements will not only improve urban and agricultural economies' resilience, but will also provide benefits such as climate mitigation, food, and water security, increased biodiversity, job creation, and empowerment of underprivileged communities. Transitioning to a circular economy necessitates a comprehensive and systematic implementation of a roadmap. The net-zero future is such a significant necessity that it will affect every aspect of our daily lives. As a result, start-ups will have a plethora of opportunities, ranging from plant-based proteins and carbon emission trackers to electric vehicles and new battery technologies, involving waste management in the design phase to assist in closing the loop and contributing to a more sustainable planet.