Circular economy a $45 billion opportunity by 2030 in India: report
- A circular economy ecosystem refers to a closed-loop production model where resources are reused and kept in the production loop, allowing for more value generation
NEW DELHI: India’s circular economy could touch $45 billion by 2030, an opportunity startups can potentially to tap into, according to a report by venture capital fund Kalaari Capital.
Adopting circular economy practices can help generate savings of over $624 billion by 2050 across sectors such as food, agriculture, construction, and mobility in India, the report said. Sectors such as fashion, construction, agriculture and food, mobility, and rare earth materials are expected to provide the biggest opportunities for circular economy startups.
A circular economy ecosystem refers to a closed-loop production model where resources are reused and kept in the production loop, allowing for more value generation. The objective is to retain as much value as possible from resources, products, and materials to create an ecosystem that sustainably promotes longevity, reuse, refurbishment, and recycling, the report highlighted.
Advocacy and adoption of circular economy is key in a market like India that already faces a huge strain on the supply of resources owing to the country’s large population.
Adoption of circular economy will have a direct financial impact in India. The cost of providing services to individuals following a circular path will be lower than the traditional take-make-waste model. Greater savings can help drive widespread adoption, especially among India’s cost-conscious consumers, it added.
“India is expected to become the world’s third largest economy by 2030, accounting for about 8.5% of global GDP. If the global circular economy touches $4.5 trillion by 2030, then we’re looking at a $45 billion opportunity provided India captures just 1% of this market. If India’s share of the circular economy matches its contribution to global GDP at 8.5%, we’ll have a over $380 billion circular economy here,” according to the report.
This could also positively impact the environment in the form of lowered levels of congestion and pollution.
However, over the past five years companies in the circular economy ecosystem have attracted investments totaling only $1.8 billion across various sectors in India. That’s a sliver of the total funding drawn by startups in the same period.
Over 60% of the deal volume within circular economy and approximately 80% of the value of deals comprise of mitigation-oriented innovations in energy and transportation, the fund said in its report.
“This mirrors the prominence of energy and mobility start-ups globally. Over the last decade, significant techno-commercial progress, a favourable policy environment, and the evolution of standardised frameworks for impact measurement have fuelled increased adoption. On the other hand, sectors like smart-agriculture, waste, environment, and natural resources are still ramping up in India,” the report added.
The report pointed to several models companies could adopt in the circular economy including circular supply chain, recovery and recycling, product life extension, sharing as a service and product as a service.
It also emphasised sectors such as fashion, agriculture and construction that are ripe for such innovation.
For instance, the food value chain in India is prone to high wastage. Food wastage and asset under-utilisation are some of the areas circular economy startups can tap into, thus creating annual benefits of $ 61 billion by 2050.
“As such, startups can solve different problems across the value chain. For instance, startups offering Product-as-a-Service can help improve asset utilisation at the farming stages, while product recovery and recycling models can be effectively leveraged at the post-consumer stage,” the report added.
It also pointed to the more recent popularity of environment-friendly brands selling footwear, clothes, handbags, daily essentials etc., made from recycled materials.
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First Published:22 Apr 2022, 05:41 PM IST
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