Circular economy

Indian Economy glossary

Topic: Environment and Sustainable Development · NCERT: Beyond NCERT

Meaning

A circular economy is an economy designed so that waste is not created in the first place. Materials stay in use for as long as possible through reduce, reuse, repair, remanufacture and recycle. It replaces the linear economy of take → make → use → dispose.

It matters because factory waste and thrown-away goods pollute soil, rivers and air. In a circular economy, waste becomes an input for new production, so fewer fresh resources are used. This puts sustainable development into practice. The Brundtland Report (1987) defined sustainable development as meeting today's needs without harming future generations' ability to meet their own.

Explanation

Linear vs circular: how the flow changes

  • Linear economy: take → make → use → dispose.
  • Resources move in one direction only.

  • Everything ends as waste in a dump, a river or the soil.

  • Circular economy: the loop is closed.

  • Products are designed to last, to be fixed and to be taken apart.

  • At the end of its life, a product goes back into production. It does not go to the dump.

  • Why this matters in real life:

  • Tamil Nadu leather factories create many jobs, but their chemical waste pollutes rivers and soil.
  • Old mobile phones that are thrown away and not recycled leak lead and mercury into soil and water.

The "5 Rs": the parts of a circular economy

They are listed roughly from most useful to least useful:

  • Reduce: use less material in the first place.
  • Reuse: use the same product again.
  • Repair: fix it instead of throwing it away.
  • Remanufacture: rebuild used parts into "as-new" products.
  • Recycle: turn waste back into raw material.
  • Key point: recycling is the last step, not the whole idea. A circular economy first tries to stop waste from being made at all.

What the producer must do

The NCERT list for firms:

  • make less waste
  • avoid pollution
  • clean (recycle) industrial wastewater before releasing it
  • use recycled products as inputs

The main policy tool that makes producers act is Extended Producer Responsibility (EPR). EPR is a rule that makes the producer responsible for collecting and recycling its product at the end of its life, not just for making and selling it.

Worked examples

  • Paper recycling: 1 tonne of recycled paper saves 17 trees and uses about 70% less energy and water.
  • A town recycles 10 tonnes of paper.

  • Trees saved = 10 × 17 = 170 trees.

  • Why action is urgent (growth of e-waste): India's e-waste was 13,46,496 tonnes in FY 2020-21 and 16,01,155 tonnes in FY 2021-22 [1][2].

  • Rise = 16,01,155 − 13,46,496 = 2,54,659 tonnes
  • Growth = 2,54,659 ÷ 13,46,496 × 100 ≈ 19% in one year

In India

  • E-waste means thrown-away electrical and electronic goods such as phones, laptops and TVs.
  • E-Waste (Management) Rules 2022:
  • notified on 2 November 2022
  • in force from 1 April 2023

  • replaced the 2016 rules [1][2]

  • What the 2022 e-waste rules require [1][2]:

  • 106 types of electrical and electronic equipment (EEE) are listed in Schedule I and covered by EPR.
  • Producers get recycling targets, set against the e-waste expected from their past sales:
    • 60% in 2023-24 and 2024-25
    • 70% in 2025-26 and 2026-27
    • 80% from 2027-28 onwards
  • EPR certificates can be created and traded.
  • Environmental compensation (a penalty for missing targets) applies, with verification and audit.

  • Recycling is counted from the end products of recycling, so that firms cannot make false claims.

  • Plastics:

  • EPR comes under the Plastic Waste Management Rules 2016.

  • The 2022 EPR guidelines added tradable EPR certificates. A recycler earns a certificate for each tonne it recycles. It can sell that certificate to a producer who needs to meet its target.

  • Batteries and tyres: EPR regimes were brought in during 2022.

  • Right to repair: consumers can get spare parts, tools and repair manuals, so a product can be fixed instead of replaced. The Department of Consumer Affairs (DoCA) Right to Repair Portal was launched in 2022.
  • Urban mining: recovering valuable metals such as gold, copper and rare earths from e-waste and other city waste, instead of digging new mines.
  • Policy links:
  • SDG 12 ("Responsible consumption and production") in the SDGs (2015-2030)
  • Mission LiFE (Lifestyle for Environment), which applies the same idea to the choices of individuals
  • Schedule VII of the Companies Act 2013 lists environmental sustainability as an activity that counts as CSR spending

Don't confuse with

  • Linear economy: take → make → use → dispose. Resources flow one way and end as waste. The circular economy closes this loop.
  • Recycling: this is only one of the 5 Rs, and the last one. A circular economy puts reduce, reuse and repair first, so that less waste is made at all.
  • CSR (Corporate Social Responsibility): under Section 135, Companies Act 2013, companies above set size limits must spend 2% of their average net profit on social and environmental causes. EPR is different. It makes the producer responsible for its own product's waste, through recycling targets, whatever the firm's profit.
  • Greenwashing: claiming to be greener than you really are. A firm that calls a product "circular" or "eco-friendly" with no proof is greenwashing. This is why the e-waste rules count recycling from end products [1].

Prelims Hooks

  • The circular economy is designed so that waste is not created in the first place. Its 5 Rs are Reduce, Reuse, Repair, Remanufacture and Recycle.
  • E-Waste (Management) Rules 2022 have been in force since 1 April 2023. They cover 106 EEE items, and EPR recycling targets rise from 60% to 80% by 2027-28 [1][2].
  • EPR makes the producer responsible for collecting and recycling its product at the end of its life. The consumer and the municipality are not the ones held responsible.
  • Tradable EPR certificates: the recycler earns them and the producer buys them to meet its target. They were introduced for plastics in the 2022 EPR guidelines.
  • Urban mining means recovering metals such as gold, copper and rare earths from e-waste, not from new mines.
  • SDG 12 is Responsible consumption and production. Mission LiFE is India's version for individuals. The Right to Repair Portal (DoCA, 2022) supports the "repair" step.

Mains Points

  • EPR builds a circular economy by designing a market.
  • Tradable EPR certificates and environmental compensation put a price on pollution. Recycling now earns money, and failing to recycle costs money.
  • This pulls the informal recycling sector, which handles most of India's e-waste, into the formal system.

  • The biggest risk is fake certificates, which is why recycling is counted from end products [1].

  • Circularity and competitiveness: the Porter hypothesis.

  • The Porter hypothesis (Michael Porter) says well-designed environmental rules push firms to find cleaner, cheaper processes. This can make them more competitive.
  • This answers the pollution-haven fear, which says strict rules drive dirty industries to countries with weak rules.

  • Urban mining also reduces India's need to import critical minerals.

  • Supply side and demand side must move together.

  • Producer rules (EPR, the e-waste targets) cover the supply side.
  • Right to repair, Mission LiFE and SDG 12 cover what consumers do.
  • With the e-waste rules alone, the loop stays only half-closed. Consumers also need to use products longer and get them repaired.

Related concepts

Read more

Sources

  1. 1E-Waste (Management) Rules, 2022 in force since 1 April 2023 with improved EPR regime (PIB)pib.gov.in · tier 1
  2. 2Parliament Question: Management of growing e-waste in the country (PIB)pib.gov.in · tier 1