Fiscal sops, stricter rules in the works to back circular economy

India is eyeing a slew of measures, including fiscal incentives and stricter regulations, as part of the framework being firmed up to encourage a circular economy.

Extended producer liability in 11 sectors or products and a refund option for products after use besides some other fiscal sops could be introduced to aid the switch to circular economy from a linear one.

The 11 sectors include scrap metal (ferrous and non-ferrous), lithium ion (Li-ion) batteries, tyre and rubber recycling, gypsum, end-of-life vehicles (ELVs), electronic waste, toxic and hazardous industrial waste, municipal solid waste and liquid waste, agriculture waste, used oil waste (generated from tools and machines) and solar panels.


The idea is to revamp the model of production and consumption in these sectors going forward. "Stricter regulations and compliance across these sectors along with some fiscal measures are being considered," a top government official told ET. Compliances would be strengthened without compromising with the ease of doing business, the official added.

Extended producer responsibility provisions have already been put in place for plastics and e-waste.

While the work on circular economy has been going for some time, NITI Aayog had put it on a fast track following Prime Minister Narendra Modi's Independence Day address laying out that the country would emphasize on 'Mission Circular Economy'.

A circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products if possible to tackle global challenges like climate change, biodiversity loss, waste and pollution.

The government estimates that a circular economy path could bring in annual benefits of ₹40 lakh crore or $624 billion in 2050.

Strict Monitoring
High-level committees formed across the identified sectors are laying out the timeline for the work to be done to help India achieve success in mitigating climate change and adhering to its global commitments on environment.

"Short-term, medium-term and long-term goals are being set for these sectors in consultation with the line ministries," a top government official told ET.

Short-term targets would be for the remaining period of the current fiscal while medium to long-term targets are being put in place for a period extending up to two years.

The official said these targets would be regularly reviewed.