As the chemical industry landscape continues to evolve, new business models are emerging, creating abundant opportunities to capture value and drive growth at every stage of the circular economy. By improving internal operations and responding to downstream industry demands, chemical companies can adopt fresh approaches to turn disruptive change to their advantage.

A circular economy in India can drive innovation and competitiveness by promoting resource conservation through reduction, reuse, and recycling. From 18% waste processing in 2014 to 70% in 2021, India is steadily progressing towards the United Nations (UN) Sustainable Development Goals (SDGs) “Agenda 2030” commitment. The current disruptive changes lead to an urgent call for action to strategize development and spur economic growth while tackling climate change and building future programs for waste management and resource preservation. The circular economy encourages a transition from linear approach to multi-life cycle circular value chains in business models, integrating the design-thinking approach for more effective and judicious use of resources.

Currently, almost 377 million citizens reside in urban areas, producing 55 million tonnes of municipal solid waste (MSW) annually. Moreover, this amount is predicted to increase significantly, reaching 125 million tonnes annually by 2031. Despite the immense relevance of the circular economy, the industry currently has a varied awareness of the concept, which poses a significant challenge concerning its widespread adoption in India. It is estimated that by 2050, India would reap yearly benefits of US $624 billion (Rs. 40 lakh crore) reducing the negative externalities.

Wider impact

Even though the circular economy in India is at a nascent stage, it has attracted investments of US $1.8 billion during the period 2016-21. Mitigation-oriented innovations in energy and transportation, account for over 60% in terms of volume and 80% in terms of deal value. This is consistent with the popularity of energy and mobility start-ups worldwide. The significant technological and commercial progress, favourable policy environment, and the evolution of standardized frameworks have bolstered the adoption of a circular economy in the last decade. Funding rise is a positive trend given that these industries account for a significant portion of the world's GHG (Greenhouse Gas) emissions (more than 70%).

The report by the World Economic Forum has projected the generation of up to 50 million jobs with an economic impact of US $15 trillion. About 1.2 billion jobs may require upskilling to transition to a circular economy. This can lead to the development of new products, services, and technologies that are more efficient and sustainable, creating circular jobs, new business opportunities and differentiating companies from competitors.

The transition to a circular economy could result in an additional US $4.5 trillion in global economic output by 2030. Moreover, in contrast to the current growth environment, India's circular economy development route might generate an annual value of US $218 billion (Rs. 14 lakh crores) by 2030 and US $624 billion (Rs. 40 lakh crores) by 2050. The implementation of a circular economy in India would require an enabling ecosystem that encourages the identification and adoption of new business models.

Presently, 377 million people living in urban cities, produce approximately 55 million tonnes of Municipal Solid Waste (MSW) (like organic waste, recyclables like paper, plastic, wood, glass, etc.) per year, with these numbers expected to skyrocket to 125 million MT per year by 2031. Moreover, only 75-80% of the MSW gets collected; out of which only 22-28% is processed, and the rest is dumped in dump yards. MSW generation is projected to increase to 165 million tons by 2031, and further rise to 436 million tons by 2050.

Consumer driven sustainability

The chemical industry touches us all in countless subtle and unseen ways. From life-saving healthcare devices and personal care goods to food, transport and clothing, around 100,000 chemicals are used in the world today, impacting every aspect of our daily lives. But the industry is at a tipping point, with disruptive pressures set to drive new business models and value chains, while creating opportunities for those ready to embrace them. By capturing a share of this rapidly expanding market for reusable, renewable and recyclable products, chemical companies can turn these changes to their advantage and drive growth while helping to shape a greener, cleaner, more sustainable future. 

Globally, resource constraints and rising concerns about sustainability are changing how consumers think about chemicals. They are calling out brands and retailers on social media and petitioning for more responsible corporate stewardship of our planet. They are also flexing their purchasing power. According to new Accenture research of 6,000 consumers in 11 countries, just over half of those surveyed said they would pay more for sustainable products, and almost three-quarters (72%) are more likely to buy eco-friendly products than they did five years ago.  In response, downstream industries (for example, automotive, clothing, electronics, food, and toys) are rethinking the design of their products, packaging and use of chemicals to embed circularity throughout the entire product lifecycle. 

As consumers seek ways to bring more environmentally friendly products with cleaner ingredients to life, they are looking to the chemical industry for answers. By creating greater transparency for consumers, greener innovation for manufacturers and accountability to stakeholders, chemical companies are uniquely positioned to lead the shift to the circular economy and hasten its adoption. While adoption of green chemistry may require initial investment costs, these will be offset as sustainable product design increases demand. What’s more, investing in green products now will protect market share as new players seek to enter and disrupt the market. Opportunities for growth abound, but with changing perceptions driving new buying behaviors, companies must act fast or risk getting left behind. 

The road ahead

By 2030, India is expected to be the world's third-largest economy, accounting for approximately 8.5% of the global GDP. The circular economy has the potential to fuel India's growth while also providing significant environmental benefits, making a sustainable and resilient framework. The recycled Polyethylene Terephthalate (PET) plastic industry in India is estimated to be worth around US $400-550 million, according to National Chemical Laboratory (NCL) and PET Packaging Association for Clean Environment (PACE). 

India's rapidly evolving market and high potential for development can provide a competitive advantage over mature economies. The aspirational long-term vision of a circular economy is based on the current strengths of the Indian market and the integration of diverse stakeholders that has the potential to pave the way for fast-tracked sustainable, and resilient prosperity. Circular economy advancements will not only improve urban and agricultural economies' resilience, but will also provide benefits such as climate mitigation, food, and water security, increased biodiversity, job creation, and empowerment of underprivileged communities.

Transitioning to a circular economy necessitates a comprehensive and systematic implementation of a roadmap. The net-zero future is such a significant necessity that it will affect every aspect of our daily lives. As a result, start-ups will have a plethora of opportunities, ranging from plant-based proteins and carbon emission trackers to electric vehicles and new battery technologies, involving waste management in the design phase to assist in closing the loop and contributing to a more sustainable planet.

Greener economy: Key benefits

• Reduces the need to extract and process new raw materials

• Saves on the cost of inputs and conserving natural resources

• Increased resource use efficiency and lower production costs

• Boosts competitiveness and increases productivity

• More diversified and resilient economy

• Less susceptible to fluctuations in commodity prices

• Reduces environmental impacts

• Lesser impact on human health 

Unlocking trapped value through circularity

Chemical manufacturers can unlock trapped value through cost savings by embedding circularity within internal operations

Green substitutes: Invest in products that improve the sustainability profile of existing applications, such as biodegradable polymers

Green feedstocks or processes: Improve existing products with renewable inputs, either bio-based or recycled, to reduce carbon footprints