Rethinking ‘Make in India’ as Circular

Deutsche Messe AG by Lars Kaletta

In 2014, the Prime Minister of India, Mr Narendra Modi, launched the Make in India initiative. The aim of the policy is to position India as a global manufacturing hub by encouraging both domestic and multinational companies to produce within India. This was expected to increase the GDP share of the manufacturing sector from 15% in 2014 to 25% by 2022, later revised to 2025 as stated in “Becoming a high-income economy in Generation,“ by The World Bank.

It also aimed to encourage both foreign direct investment (FDI) and domestic investment, providing skilled jobs to millions of Indians by 2022. This aligns with the Atmanirbhar Bharat (Self-Reliant India) initiative by reducing import dependency, especially in critical sectors such as electronics, defence, and pharmaceuticals.

To achieve this, Make in India focused on four core pillars. “New Processes” correspond to simplified rules, easier business registration, taxation reforms, and smoother regulations. “New Infrastructure” included large-scale investment in industrial corridors, logistics, and smart cities. “New Sectors” promoted 25 key industries, including electronics, defence, renewable energy, textiles, and pharmaceuticals. Finally, a “New Mindset” encouraged the government to act as a facilitator rather than a regulator.

How Has It Worked?

This system change did achieve targeted infrastructure boosts, attracting high-value foreign investment in several sectors. However, it failed to meet other goals. The manufacturing share of GDP remains below 25%, and employment in manufacturing declined by nearly 46% according to Chang Woon Nam, senior economist at IFO. Dependence on foreign capital also proved to be a risk factor. Domestic investment grew by only 1.5% after 2014 and was later impacted by the pandemic. India continues to face high operating costs on the global stage and faces tough competition from China, Vietnam, and Indonesia.

Material and Resource Dependency

Even though Make in India was supposed to introduce new ideas, it remained tied to the traditional and resource-depleting take–make–dispose model. India remains heavily dependent on material imports. It now ranks third globally in raw material consumption. According to the CIIs second edition of the National Circular Economy Framework, India relies on imports for 100% of its lithium, 90% of copper, 80% of nickel, and 84% of rare earth elements. In addition, many supply chains originate in geopolitically sensitive regions, particularly China, according to the National Circular Economy Framework by Confederation of Indian Industries (CII).

Another fact is that India is far less resource productive than OECD nations according to the same CII framework, meaning it creates less economic output per unit of material used. A vast informal waste sector handles much of India’s material recovery, yet data on treatment, quality, and traceability remains limited, resulting in a loss of value across the material system.

Structural and Policy Gaps

India has introduced various policies, such as Extended Producer Responsibility (EPR), but weak enforcement means expected outcomes are rarely achieved. Also, the above-mentioned informal sector’s role in collection and recycling remains unrecognised. Product design still neglects durability and repairability, leading to unnecessary material losses.

A significant financial barrier also exists; circular business models often require high upfront costs, discouraging small and medium enterprises (SMEs) from adopting them.

Linking Make in India to a Circular Economy

India needs to shift its focus from output quantity to value retention and resource security to transition. This means relying less on foreign investment and imported raw materials, and instead investing in local capital and urban mining, the recovery of valuable materials from existing landfills and e-waste dumps. Studies show high concentrations of critical materials already exist in India’s discarded products and waste sites.

Existing practices, such as repair, refurbishment, and reuse, should be formalised and integrated into national waste management and production systems, giving the informal sector official recognition and incentives.

A design shift is also essential. According to India's Circular Economy in Electronics and Electric Sector Action Plan, 80% of environmental impacts are determined during the design stage, the same as its energy usage, according to the Ellen MacArthur Foundation.

India can also draw lessons from the EU’s Eco-design and Circular Economy policies, which require that 25% of critical raw materials (CRMs) come from recycled sources by 2030, as outlined in the EU's Critical Raw Materials Act 2024. Companies meeting such goals could be prioritised in public procurement, creating a market for circular products.

Policy Changes Needed

Linear supply chains are increasingly inconsistent with long-term industrial resilience. Policies should facilitate closed-loop systems and industrial symbiosis, where waste from one industry becomes a resource for another.

Nationwide return systems for used products should be made convenient and transparent for consumers. EPR schemes must be effectively implemented across existing sectors and expanded into new ones. Fiscal reforms, including tax incentives, government-backed loans, and single-window clearances, will help accelerate circular projects and attract new investments.

Benefits of Circular Make in India

As mentioned in our previous Op-ed, ”Can India leapfrog the linear trap?” Studies suggest that circular economy adoption could unlock a market value of USD 624 billion by 2050, reduce emissions by 44%, and create millions of green jobs, according to the Ellen MacArthur Foundation in the document “Circular Economy in India: Rethinking Growth for Long-Term Prosperity”.

However, this attractive future requires massive effort and investment. Most virgin materials remain cheaper than secondary ones, posing a serious economic challenge. Small and medium-sized enterprises are often unmotivated to switch to circular models, and recycling complex products like solar modules or wind turbine blades remains both technologically and financially challenging.

Obstacles and Systemic Barriers

One of the significant issues is policy fragmentation. Some policies even contradict each other; for instance, fertiliser subsidies inversely affect soil and water quality goals. Weak enforcement, misaligned taxation, and the lack of a circular economy metric are also concerns.

Currently, India continues to rely on GDP growth as the primary measure of progress, which prioritises production over material efficiency. This is inconsistent with circular goals.

Capital and infrastructure lock-ins, lack of material flow data, and dominance of the informal recycling sector lead to downcycling, where materials lose quality and value each time they are reused.

Beyond infrastructure, social perceptions also play a role. There is a deep belief that consuming new products signifies progress, while using recycled or repaired goods signals inferiority in Indian households. There are also many known cases of Community opposition to hosting waste or recycling facilities, driven by health, aesthetic, or cultural concerns, which further slow progress, according to the Fraunhofer Institute’s reports on India.

Conclusion

Make in India is the perfect opportunity to integrate sustainability and circular economy principles into the nation’s industrial growth strategy. However, the goal of achieving a 25% manufacturing GDP share should not be the only benchmark, as it ignores the material value and environmental impacts that accompany this growth.

Each time I read or write about India’s future, I’m reminded of how a diverse and populous nation is emerging as the world’s fifth-largest economy. With a rapidly growing population and rising resource demand, India has no alternative but to embed circular economy principles into its future. Only by doing so can it meet the needs of tomorrow without destroying the ecosystems that sustain it.