Post-industrial revolution economies adopted the “get, make, dispose” model to achieve their modernization goals faster. The challenge of growth at that time was to consume resources without considering the damage it caused to the environment. However, things started changing as countries started realizing the damage caused by such an unsustainable growth model.
The circular economy seeks to address this problem by eliminating waste altogether. It aims to extend the life and usage period of resources, materials and goods, rethink products and business processes, create creative solutions and service models, and encourage more sustainable consumption patterns.
According to the Circularity Gap Report 2024 published by Deloitte and the Circle Economy Foundation, the circular economy is expected to reduce emissions by 40% over the next few years, create around 2 million jobs and become a market worth $2-3 billion.
A core principle of the circular economy is transforming linear supply chains into closed-loop structures, which involves adopting strategies such as designing products to be durable, modular and easily disassembled, and promoting the recovery and reuse of materials and parts.
They also need to put in place an effective reverse logistics system to facilitate the return or refurbishment of end-of-life goods.Startups can play a key role in completing these tasks.
Key reasons for the surge in circular economy investment
In line with the circular economy model, emerging Indian startups equipped with the latest technological advancements are driving the industry towards sustainability. In India, close to 400 startups are active in sectors ranging from sustainable waste management to green technology.
Despite still being in its nascent stages, circular economy in India attracted investments of $1.8 billion between 2016 and 2021.
The Indian government has always encouraged such startups. For instance, to help India move from a linear to a circular economy, NITI Aayog has recommended concrete actions to address issues related to utilizing waste as a resource and has provided a thorough legal framework for developing an advanced recycling sector in India.
NSRCEL is India’s leading incubation centre for start-ups, emerging businesses and women entrepreneurs, supporting early stage start-ups working to create a low carbon world with a positive climate impact.
Areas where investments in circular economy startups in India are expected to surge include:
Investors will be attracted to startups focusing on cutting-edge recycling technologies, especially for e-waste, plastic waste, and construction and demolition waste. Eco-friendly, biodegradable, and reusable packaging solutions need to be developed to meet the growing demand for sustainable products. Startups focusing on this sector are expected to gain momentum in the coming years. There is a strong demand for platforms that connect customers with companies offering repair services or remanufacturing products. There is huge potential for sustainable fashion startups offering clothing rental services, reused apparel, and clothing take-back programs. Other sectors where startups can implement cutting-edge climate mitigation technologies include agriculture and animal husbandry, especially technology-driven water management and scientific bio-waste processing. Products made from sustainable materials, such as edible silverware, will also ensure the survival of startups. Carbon capture is a rapidly expanding sector with huge investment prospects in India as a means of mitigating climate change. Leading the way in direct air capture (DAC) technology is the development of advanced capture materials and scalable modular systems by startups.
DAC technology removes CO2 directly from the environment, and these systems can be combined with renewable energy sources to ensure carbon-neutral operations.
Additionally, carbon capture and storage strategies, which involve capturing carbon dioxide and burying it underground or using it in industrial activities, are gaining in popularity. Investment is essential as these companies address the dual challenge of reducing atmospheric carbon dioxide concentrations and promoting sustainable industrial activities.
Additionally, startups can combine circular economy lifestyle practices with climate action programs to conserve and protect natural resources. Climate action actors can leverage cutting-edge models and technologies to significantly reduce carbon emissions while lowering the cost of renewable energy for consumers.
Across the Indian textile and apparel value chain, a range of companies are developing that can address the industry’s key concerns and provide creative solutions to accelerate the industry’s transition to a circular world.
These businesses are focused on creating novel products, processes, services, or combinations thereof at key stages in the value chain. Many of these ideas, if widely adopted and implemented, have the potential to upend current linear approaches to manufacturing, retail, and consumption.
Conclusion
The adoption of the seven principles of a circular economy (reduce, reuse, recycle, redesign, remanufacture, refurbish and repair) is recommended by the circular economy movement, which sees it as an urgent need.
Business parks, industrial clusters and initiatives should all be designed with these ideas in mind. With a stable and encouraging policy environment for a circular economy, India can become a manufacturing powerhouse and meet its climate change commitments.
