Circularity is not a maiden concept in India — it is intrinsic to the fabric of Indian society, rooted in age-old practices and cultural values that prioritise resourcefulness and waste reduction. However, with the nation experiencing rapid economic growth, the challenges of swift urbanisation and industrialisation have escalated, and per capita consumption of resources, particularly the non-renewables have increased, resulting in the widespread and prevalent adoption of the take-make-dispose model in the country today.
To put facts into perspective, India’s plastic consumption stands approximately at 20 million tonnes in 2019-20, and the nation generates 3.4 million tonnes of plastic waste per year, of which a meagre 30 percent is recycled. Similarly, 2021-22 statistics declared by the Central Pollution Control Board in July this year revealed that 1.6 million tonnes of e-waste are generated, whereas again, only about 33 percent is recycled.
As the economy struggles with supply–demand issues, with greater urbanisation and greater generation of “waste” and inadequate recycling and treatment, it is time for the fundamental instinct of circularity embedded in Indians — that of reuse, reduce, repair — to achieve industrial scale.
Globally, a significant shift toward sustainable resource usage is underway, driving a 7.8 percent annual growth in the circular economy market to over $650 billion by 2028, and this directional change could unlock $4.5 Trillion in GDP growth by 2030. 68 percent of this potential is expected to be achieved by non-renewables substitution and waste recovery.
Zooming in on India, circular economy has the potential to be upwards of $45 Billion by 2030 and the private sector stands to gain a first-mover advantage to secure green investments for applying circular economy in their operations.
India Inc., today faces growing regulator, investor, and consumer pressures of adopting pro-climate practices both domestically and internationally. Instruments such as the Carbon Border Adjustment Mechanism (CBAM) by the European Union can negatively affect Indian businesses by impacting competitiveness in international markets, creating trade tensions, and significantly increasing compliance costs, among others.
As per UNCTAD, India is expected to lose $1-$1.7 Billion in exports of energy-intensive products such as steel and aluminium due to the imposition of CBAM. Current manufacturing choices in fast-growing economies like India are critical to realise the global potential and hence circular economy in these hard-to-abate sectors is crucial to mitigate scope 3 emissions.
While businesses today have a clear view of the drivers to pursue circularity, they grapple with the application of the best fit models of circularity which could help in ensuring sustainability with profitability. India Inc., could explore the following innovative circular strategies in manufacturing that promote efficient waste and byproduct synergies, while rendering significant resource savings:
Within production site
Exploring reuse, recycle, and recovery of materials from the current manufacturing value chain as input/ raw material at the production site itself helps avoid material and waste transportation costs, and potentially reduces dependency on externally sourced input. This model, for instance, can find strong applicability in the textiles sector, wherein cotton waste can be recycled and re-introduced into the material flow as input material (fibres). This could also support in reducing cotton import dependencies in India, which touched an all-time high of about $1.6 Billion in value last year.
Within company
For conglomerates, exchange of byproducts across the manufacturing value chain from one group subsidiary to another can aid in reducing procurement of input from external sources. For example; Aditya Birla Group’s Hindalco generates bauxite residue as a byproduct from the alumina refining process and has entered into a partnership with the Group’s subsidiary UltraTech Cement to utilise this residue as input to the cement manufacturing process. Typical advantages would be ease of collaboration and management of byproduct within the organisation’s boundaries.
Company to company
The waste across the manufacturing value chain of a company from a particular sector often finds its use case in another sector, and in such scenarios, collaboration is key. Eco industrial parks offer a unique opportunity for companies to co-locate based on optimal material exchange possibilities, and seamlessly implement the concept of industrial symbiosis, wherein byproducts of one become raw materials of another. Exchange of waste oil as byproduct of petrochemicals to chemical manufacturers at the Ulsan Mipo and Onsan Eco Industrial Park in South Korea, and that of bioethanol from a cellulosic ethanol producer to a refinery at the Kalundborg Eco Industrial Park are key success cases of company-to-company circularity globally and have a strong case for implementation in India as well.
Cluster to company
In continuation with the concept of industrial symbiosis, eco industrial parks enable synergies from the industrial cluster, zone or park level to the manufacturing facilities located within them, especially true for products required by all or most companies. A key example in this regard would be that of a steam network that generates steam to be utilised for various processes in industries such as sugar, paper, fertilisers, chemicals, food, and textiles among others. Steam on the other hand is generated as a byproduct of processes in steel manufacturing, which can be routed through a centralised facility and distribution network to deliver steam to the receiving companies. Steam networks have been tried and tested globally across industrial parks, and data reveals that steam procured from the network is considerably more cost effective than that produced onsite.
To activate these models of mainstreaming circularity, an ecosystem of enablers is critical. Options such as deposit refund schemes, for instance, rely on the availability of a robust and mature supply chain around recyclable waste and ease of access to disposal points. Uttarakhand has partnered with Recyckal, a leading startup in this space to successfully implement the deposit refund model in Kedarnath that integrates technology via a QR based waste collection process, earning the initiative the Digital India Award last year.
Another area where technology could accelerate the uptake of waste synergies is by improving the traceability of available scrap through a national or regional byproduct database.
Besides the self-starters who showcase leadership in circular economy implementation, policy makers have a crucial role to play through a regulatory push, with stronger implementation of scrappage policies, extended producer responsibility (EPR) and exploration of opportunities for setting minimum recycling mandates for the high waste generators.
While circularity has attracted around $1.8 Billion in investments across diverse Indian sectors in the past five years, an economy-wide circular transformation would require rapid scale-up of finance, and innovative mechanisms such as blended finance across the waste management value chain and infrastructure would be key to solve the finance piece of the circular economy puzzle.
Finally, environmentally sustainable taxonomy and circular product labelling offers added impetus for green manufacturing that can help companies further tap the exports market in light of the shifting global regulatory landscape. Action from governments, businesses and financiers across these enablers is key for the Indian private sector to capitalise on the circular economy opportunity in India, given the nation’s leadership in technology and innovation coupled with strong cultural acceptance towards circular practices.
—The authors, Anirban Mukherjee and Tania Banerjee, are Managing Director & Lead -climate and sustainability, and Project Leader, respectively at BCG India. The views expressed are personal.
(Edited by : C H Unnikrishnan)
First Published: Oct 3, 2023 7:52 AM IST
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