India, the third-largest global consumer of raw materials, faces significant material demand projections of nearly 15 billion tonnes by 2030 and potentially over 25 billion tonnes by 2050
The traditional linear economy model of "take, make, waste" is no longer sustainable for our planet. More than 100 billion tonnes of resources enter the economy every year, yet less than 10 percent are recycled. Resource use has increased dramatically since 1970, rising from 30 to 106 billion tonnes, an increase from 23 to 39 kilogrammes of materials used on average per person in a day. If this unsustainable pattern continues, the global consumption of natural resources is projected to increase by 60 percent by 2060, requiring the resources of an extra planet to support our current consumption levels.
Embracing the Circular Economy
India's ancient Vedic wisdom and traditional eco-ethical practices have always championed the principles of Reduce, Reuse, and Recycle, which are at the heart of the circular economy model. Bringing these principles into the modern context, the concept of a circular economy remains crucial for building a sustainable society. As the world is united in tackling the pressing challenge of climate change, this circular economy approach offers a robust framework for sustainable development, guiding business innovation, policy, and education.
Governments worldwide are increasingly prioritising models for a safer and healthier environment. The European Commission's Circular Economy Action Plan exemplifies this commitment with legislative and non-legislative measures across product life cycles, promoting circular economy practices and sustainable consumption within the EU economy.
India, as the third-largest global consumer of raw materials, faces significant material demand projections of nearly 15 billion tonnes by 2030 and potentially over 25 billion tonnes by 2050. Acknowledging this challenge, India is pursuing a path towards a circular economy, projecting substantial economic benefits: an estimated $ 218 billion annually by 2030 and a significant $624 billion by 2050. The Government of India is aggressively working towards its net-zero goals, with circular economy strategies playing a pivotal role. NITI Aayog, the government's think tank, is leading this transition through policy papers and the establishment of a Circular Economy Cell (CE Cell). This initiative coordinates 10 sector-specific action plans across ministries and departments, including initiatives like the vehicle scrapping policy, plastic and e-waste management rules, and strategies for recycling construction and demolition waste and metals. These efforts aim to foster circularity across sectors and ensure sustainable resource use for future generations.
Businesses Driving Circular Practices Across Sectors
While the government has made commendable efforts to drive change, the business world is also stepping up to the challenge by integrating the circular economy into its core strategy.
Across industries, companies are innovating with circular supply chains that utilise renewable inputs, employing advanced recycling technologies to extract value from waste, extending product life through repair and remanufacturing, implementing sharing platforms for resource pooling, and adopting product-as-a-service models that prioritise utility over ownership.
Furthermore, it is increasingly clear that the circular economy model offers a robust framework for development across sectors, driving business innovation. In the automotive industry, there is a growing exploration of vehicle-as-a-service models to maximise residual value through increased utilisation, alongside the promotion of innovative designs for enhanced maintainability and efficiency. Similarly, construction firms are embracing modular building techniques and implementing strategies to recover materials from demolition sites, aiming to reduce costs and minimise environmental impact. Meanwhile, other industries, like consumer electronics, are also moving towards product-as-a-service models that incentivise longer product lifespans and facilitate easier recycling processes. A circular economy development path in India could create an annual value of Rs 14 lakh crore ($218 billion) in 2030 and Rs 40 lakh crore ($624 billion) in 2050 compared with the current development scenario.
Environmental and Social Impact
Beyond economic benefits, a circular economy development path could significantly mitigate negative environmental externalities. According to the European Environment Agency, industrial processes and product use are responsible for 9.10 percent of greenhouse gas emissions in the EU, while the management of waste accounts for 3.32 percent. Developing more efficient and sustainable products from the start would aid in the reduction of energy and resource consumption, as more than 80 percent of a product's environmental impact is determined during the design phase.
A shift to more durable products that can be reused, upgraded, and repaired would reduce waste. According to estimates, greenhouse gas (GHG) emissions could be 23 percent lower in 2030 and 44 percent lower in 2050 than in the current scenario, bringing India's efforts in line with the Paris Agreement targets.
Moreover, the circular economy's emphasis on resource recovery and remanufacturing holds the potential to create new jobs and foster entrepreneurship as businesses seek to fill niches in these emerging sectors. This economic diversification can drive social progress while simultaneously addressing environmental challenges.
Embracing principles of the circular economy is not just essential for mitigating environmental impact and combating climate change; it is imperative for unlocking new avenues of growth and ensuring a sustainable future. The choices made today will shape India's development trajectory in the coming decades, making the transition to a circular economy both a responsibility and an opportunity for businesses and society as a whole.
(Pihu Jain is the Head of Girnar Foundation and the CSR arm of CarDekho Group)