India has seen sustained growth over the last few decades. But this growth has been characterized by increased consumerism accelerating demand for natural resources, particularly material resources. India is heavily reliant on imports for many of these material resources and the domestic extraction of the others exerts environmental pressures and creates social discord particularly in mining locations.

According to UN International Resource Panel’s Global Material Flows Database, India’s estimated annual material consumption is 7.42 billion tonnes, second only to China’s 34 billion tonnes. There has also been a shift from biomass and renewable materials to non-renewable materials, creating new waste flows. Decoupling economic growth from resource use is possible only through a gradual transition to a resource-efficient and circular approach, and a shift from the traditional linear growth model of take, make and dispose. Such an approach promotes the use of 6 R principles (reduce, reuse, recycle, refurbish, remanufacture and redesign) at various life cycle stages of any product, process and service.

The draft National Resource Efficiency Policy, 2019, is deemed as a significant step towards the desired transition. While waste minimization and enhancing resource productivity gained salience in India in recent years, an overarching policy will facilitate more thinking and action towards closing resource use loops across sectors and regions. The policy clearly notes that the businesses have a key role to play and the need to create resource-efficient business models that lead to value creation or profits, thereby encouraging more and more businesses to get involved. The value creation can emerge through the opportunities created by new markets for secondary resources, for components and parts, and for shared resources and ecosystem around these. The role of government is equally important in creating the infrastructure and systems to accelerate the transition through its direct involvement in financing.

Market-based instruments and fiscal mechanisms in the form of taxes, charges, subsidies, incentives and budget allocations, marketable permits, deposit-refund systems and performance bonds, can be extremely helpful in promoting resource efficiency at different stages of the value chain. Tax exemptions for components and sub-components made from recycled material in the product value chains can promote resource efficiency in the supply side, whereas tax sops for eco-labelled products will encourage consumers to purchase those products, based on informed decision choices. Targeted tax and other financial incentives for manufacturers of green building products made from secondary raw material can help make these products more competitive.

Financial institutions can design innovative financing instruments that have less interest implications and can fetch tax benefits. Return on equity investments in resource-efficient processes and products can be made tax-free (or have reduced capital gain taxes).

Consumers buy products to enjoy services from them and, hence, economic instruments need to be designed to ensure that such services be achieved at lower costs in comparison to owning products that deliver services. Preferred sustainable procurement need to be promoted to create a major demand pull for products and services that have integrated circularity in their design and provision. Businesses need to introduce innovative product pricing models that promote market participation of resource-efficient behaviours and practices, particularly at retail-end use level.

Bhattacharjya and Bakshi are fellows at The Energy and Resources Institute (Teri), in New Delhi and Mumbai.