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  • Apoorva Arya & Arpit Bhutani

Building Blocks of a Circular Economy in India: The Role of Public Policy

This article draws on the results of the report Circular Economy in India: Rethinking Growth for Long-term Prosperity, produced by the Ellen MacArthur Foundation with the support of Climate Works and UNCTAD as knowledge partners. The report analyses how a circular economy development path in India could create economic benefits for business and households, and reduce negative externalities.


“Paris or no Paris, it is our conviction that we have no right to snatch from our future generations, their right to have a clean and beautiful earth. It is part of our thinking and for that reason we do not believe in exploitation of the nature. We people do not have the right to take more than necessary from nature.”

– Honourable Prime Minister of India, Shri. Narendra Modi, at the St Petersburg International Economic Forum, 2017.

Lots of circular activities are inherently enshrined in the Indian society. These include high levels of repair and reuse, as well as the valorisation of post-use materials through recycling. In fact, the collection and recovery rate for many scrap materials as well as the re-use rate of items is much higher than in most developed countries. However, most of these activities take place in an informal way, providing the only source of livelihoods for the poorer portion of the population. As the Indian middle class and the population in general are growing, these activities are less attractive unless a more systematic policy approach is taken to professionalise and move them up the value creation ladder.

Without the enabling conditions brought about by a public policy framework, the amount of circularity in India is likely to stagnate or even decline – as it is a feature of rapidly developing markets to move towards more linearity through more frequent replacement of assets due to increased spending power and economies of scale.

Thomas Dye once rightly said that public policy is whatever a government chooses to do or not to do. In the transition towards a circular economy, there is a need for governments to choose wisely and act as catalysts in the transition.

In support of a circular economy, several mature economies have passed legislations, and the European Union (EU) has taken a lead with its Circular Economy package. Sweden is now giving tax breaks for repair activities (50% cut on VAT), and has passed a law that mandates retailers selling electronic goods to accept the same quantity of the goods they have sold, for reuse or recycling. Japan and the Netherlands on the other hand have also adopted strong Circular Economy legislations.

What is noteworthy here is that China, with a comparable development path to that of India, has passed a Circular Economy Promotion Law in 2009. The Law was formulated for the purpose of facilitating circular economy, raising resource utilisation rate, protecting and improving the environment and promoting sustainable development.

Furthermore, in Laos, the United Nations Development Programme (UNDP) is working on a Circular Economy report, which is about to be endorsed by the government.

To create a global circular economy, changes are needed at a global level and many countries are participating in this transition. However, like all development goals this one also cannot be achieved without involving India, one of the most dynamic rapidly industrialising countries and soon to be the most populous nation in the world.

Existing policy frameworks

The current government in India, led by Prime Minister Narendra Modi, has launched ambitious programmes with some elements of circularity enshrined that intend to lead India towards a sustainable and high economic growth model. These programs and initiatives have shown India’s commitment towards achieving the United Nations Sustainable Development Goals (SDGs) and Paris accord commitments.

However, these policies still focus on individual areas and themes, and tend to be fragmented and lack a systemic approach, which creates confusion for businesses that want to adopt circular business models.

Following are some of the policies and schemes of the government that could harness the potential outlined in the report Circular economy in India: Rethinking growth for long-term prosperity launched by the Ellen MacArthur Foundation. The existing building blocks presented below constitute an initial set of tools that could be integrated into an ambitious circular economy plan.

Environment & Climate Change


National Action Plan on Climate Change

The Indian government has made a range of commitments as part of the Paris Accord through focused programmes including The National Solar Mission, The National Mission for Enhanced Energy Efficiency, The National Water Mission and others.

Zero Defect Zero Effect

Through this scheme, the government aims to increase the quality of Indian products without negative effects on the environment. It focuses on the fact that high quality manufacturing can be achieved while phasing out negative externalities associated with it.

Indian Resource Panel

The Indian resource panel was established by the Indian Government to prepare a strategic roadmap for utilisation of secondary resources, creation of an environment for recycling, promoting suitability and decoupling India’s growth from fossil fuels.

Food and Agriculture


Pradhan Mantri Krishi Sinchai Yojna

This is a scheme of the government focusing on giving “har khet ko pani” i.e. every farm should have access to water by improving water use efficiency through “more crop per drop”.The focus is on recharging aquifers and explore better water practices in traditional agriculture.It also focuses on new areas such as reusing treated municipal wastewater for peri-urban agriculture and precision irrigation systems.

E-national Agriculture Market (E-NAM)

The E-NAM platform is a digitally-enabled portal that helps farmers, traders, buyers and exporters get better access to market information to support more transparent practices, effective use of resources and better return on investment.

Apps Like Kisan Suvidha, Pusa Krishi and M Kisan

A host of mobile applications have been designed primarily for Indian farmers. Like E-NAM, they aim to be a one stop shop for all the information farmers and other players in the agriculture supply chain may require.

National Mission for Sustainable Agriculture:

The Indian government targets key aspects of water use, nutrient management and livelihood diversification through the Mission for Sustainable Agriculture. The policy measures involved promote the use of digitally enabled asset sharing solutions, knowledge sharing, peri urban farming, regenerative agriculture, and more resource efficient practices enabled by technology, all seeking to develop a more circular economy in food and agriculture, as outlined in the Ellen MacArthur Foundation’s recent report.

Mobility and Vehicle Manufacturing


Niti Aayogs Report – India Leaps Ahead: Transformative Mobility Solutions

The Niti Aayog report’s objective is that India avoids falling into the traps of the traditional mobility paradigm with traffic congestion, pollution and 150,000 deaths annually due to traffic accidents.

The report suggests that by making India’s passenger mobility shared, electric, and connected India could cut the sector’s energy demand by 64 per cent and carbon emissions by 37 per cent.

The National Electric Mobility Mission Plan 2020

Through this plan, the Indian Government promotes the uptake of electric and hybrid vehicles use.The goal is to have 6-7 million in use by the year 2020.

Technology Platform for Electric Mobility

To help the growth of electric vehicles, the government supports research and development projects that matches companies with academic institutions, enhances understanding and provides access to funding.

FAME India Scheme

Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) is the government’s policy to support the development of a market and manufacturing ecosystem for hybrid and electric vehicles.Furthermore, the government is working on a comprehensive electric policy, which is scheduled to be out by end of this year.

The report by the Ellen MacArthur Foundation has a strong emphasis on electric vehicles, however it also covers other aspects like how better planning could diversify transportation options and develop a multi-modal system. Furthermore, vehicle manufacturers could develop new business models and revenue streams to profit from designing long-lasting, upgradable and efficient vehicles.

Cities and Construction


Smart Cities Mission

The objective of the Smart Cities Mission is to promote sustainable and inclusive cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions.

Pradhan Mantri Awas Yojna (housing for All)

The scheme aims to provide housing for everyone. There is an opportunity here to design buildings with energy and water efficiency, modular construction and selection and looping of construction materials. These circular economy design approaches can contribute to housing for all and make construction practices economically and environmentally beneficial.

Swachh Bharat Abhiyan (Clean India Mission)

The Clean India Mission is focused on sanitation, namely building individual toilets, community toilets and solid waste management. The government has just started the scheme of also separating waste at household level into wet and dry waste.

Solid Waste Management Rules, 2016

This new set of rules will replace the Management and Handling Rules, which were in place for the past 16 years. When it comes to the circular economy,some of the salient features of the rules are segregation at source, collection and disposal of sanitary waste, waste processing, waste to energy and use of compost.

Plastic Waste Management Rules 2016

Plastic waste is a hot topic in India, and the government is pursuing new rules around extended producers responsibility.Industries that use plastic will have to bear the onus and pay towards the collection of plastics through the distribution system that they use for retailing their products. This is a worthwhile initiative of the government, however, there has been a criticism that the rules only talk about management of plastics and not about reducing the plastic waste in future.

Construction and Demolition Waste Management Rules 2016

Under the rules, local bodies have to utilise 10-20% material from construction and demolition waste in municipal and government contracts. Cities with a population of more than 1 million people have to commission processing and disposal facilities of construction and demolition waste.

In all of the above policy measures, a circular economy approach can play a pivotal role in improving their efficacy and implementation. Their success will call for, a strong IT infrastructure, and support from the Digital India Mission will be vital.

Policy Recommendations

The report of the Ellen MacArthur Foundation has laid down some policy recommendations for the Indian Government to set a direction for the transition to a circular economy and create the right enabling conditions. The following five recommendations from the report can guide Indian policymakers at national, state and local/city level in supporting the transition to a circular economy:

Overarching policy initiatives: While aspects of circular economy principles can be found in scattered provisions and regulations, a coherent focus and systematic approach would be needed, including integration of circular economy ideas into existing government initiatives.

Foster innovation by design: Policymakers could help to foster innovation by design in the area of circular economy and help Small and Medium Scale Enterprises reach scale on efficient technologies.

Financial incentives: Policymakers could develop financial mechanisms and incentives for businesses that take the lead on a circular economic path towards development.

Create platforms for multi-stakeholder collaboration: Collaboration among stakeholders to address key issues is critical for driving systemic change. This can be done by connecting different actors – businesses, government, the informal sector, and research institutions – to consider products and material flows from the design stage to the collection and return for reuse and recycling.

Support circular models through public procurement: Public procurement could support promising and scalable circular business models would help kick-start those and increase their adoption.

Inspire the younger generation: Introducing circular economy principles into the formal and informal education system would enable the young generation to think, innovate and design products and systems suitable for a circular economy. This would empower learners at all stages with the right skills and mind-sets to become active shapers of the future economy.

There is a definite need for overarching or crosscutting policy measures, such as fiscal measures or investment incentives, and sector or issue-specific policy measures focusing on hotspots. Ideally, this should be conceptualised in a coherent roadmap that leads to mutually complementary and reinforcing transition towards a circular economy.

This should be taken as an opportunity for India to take a lead in a circular economy approach to development – and in the process demonstrate that India can do so without sacrificing economic growth.


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