In recent years India’s rapid economic growth combined with rising incomes has created a larger consumer base, leading to growing demand for natural resources and material goods. India produces nearly 62 million tonnes (mt) of municipal solid waste annually, which is likely to reach 165 mt by 2030 and 450 mt by 2045. But the system to manage such wastes is practically dysfunctional, suffering from organisational inefficiency, distorted incentives, decrepit infrastructure and suboptimal funding.

According to a CPCB report, in 2014-15, 91 per cent of solid waste was collected, of which, only 27 per cent was treated and the remaining 73 per cent was disposed at dump sites. A recent study indicates that India would need a landfill of 88 sq. km, nearly the size of Bengaluru, to dump all its waste by 2030.

As our material consumption is expected to triple by 2025, recycling offers a viable and sustainable domestic option for meeting the country’s growing material demand. Thus, a transition is imminent, a paradigm shift, to raise the quality of economic growth from the depletive ‘produce-consume-dispose’ led linear economy to a ‘reduce-recover-reuse-recycle-redesign-remanufacture’ led circular economy which is more regenerative and restorative in nature.

Waste from industrial, municipal, agricultural, construction and demolition (C&D) and other processes normally contain base materials in the form of scrap, like ferrous metal, non-ferrous metals, plastics and glass. In India, recycling rates are way below international benchmarks — for packaging paper, it is 27 per cent; plastics, 60 per cent; and metals, a mere 20-25 per cent. In Scandinavian countries, the average recycling rates have reached 90 per cent.

Indian recycling rates are languishingly low for a variety of reasons. First, there is neither strong social awareness nor enough political will to promote recycling as a way of life. Second, waste collection and segregation mechanism is largely unorganised leading to scrap contamination. Third, most municipal infrastructure is dated and inadequate in terms of collection, transportation and scrap yards. And, fourth, appropriate technologies to maximise recovery from recycling are still nascent. Indian recyclers have no choice but to depend mainly on imports for quality scrap.

Consequently, India is the third largest importer of various types of scrap material. Even imports from countries having Free Trade Agreement (FTAs) with India are not cheap because suppliers mark up their prices to bring parity with duty added price of scrap from non-FTA countries.

To hedge such risks we need to ensure that there is sufficient supply of domestic scrap conforming to globally acceptable quality standards. There is also an urgent need to incentivise innovation and R&D as unavailability of indigenous technology often forces players to rely on costly import of machineries. These measures would save vital foreign exchange and, more importantly, protect our beleaguered environment and create local jobs.

There is much value in waste. The environmental and social gains, are truly remarkable. For example, one tonne of recycled paper saves approximately 17 trees, 2.5 barrels of oil, 4100 kWh of electricity, 4 cum of landfill and 31,780 litres of water over production of virgin paper from wood.

Recycling of one tonne of steel scrap saves 1.2 tonnes of iron ore, 0.7 tonnes of coal, 0.5 tonnes of limestone, 287 litres of fuel oil, 2.3 cubic meters of landfill, and is achieved through 40 per cent less water and with 58 per cent avoided CO2 emissions.

According to a study by the University of Oklahoma, recycled steel reduces 97 per cent mining waste produced through manufacture of virgin resources, saves 75 per cent of energy, cuts back 86 per cent of air pollution and 76 per cent on water pollution. Similarly, recycling of an aluminium can or producing a glass container saves 95 per cent and 70 per cent, respectively, of the energy required for producing a similar container from virgin material.

Bigger benefits arise as recycling value chain is typically more labour intensive — it can potentially generate 6-8 times more jobs than by land-filling or incineration activities of wastes. As an example, the US scrap industry generated over 150,000 direct jobs and 323,000 indirect jobs in 2015, according to Institute of Scrap Recycling Industries (ISRI), USA.

In China, the recycling industry created 1.5 million direct jobs and about 10 million indirect jobs. In India, the metal recycling sector currently employs nearly 1.75 million people and contributes around 2 per cent to GDP. For India, recycling has the potential to create six times more jobs and generate around ₹14-lakh crore of additional cost savings by 2030, which is approximately 11 per cent of our annual GDP.

For such compelling benefits, the global scrap metal market has been growing and is expected to increase to $406.2 billion in 2020 from $277.1 billion in 2015.

While India provides a tremendous potential for reuse and recycling of products, there is a felt need for a more comprehensive policy and regulatory simplification aiming at a formal ecosystem and ‘ease of doing business’ for recyclers.. This includes removing barriers for the input factors, establishing a marketplace for scrap and recycled products, promoting public procurement and enhancing overall consumer awareness, and harmonising standards and certification.

While source segregation has to be actively promoted through behavioural shifts, the four million rag-pickers and kabadiwalas should be substantially incentivised and trained to efficiently transfer sorted waste to the recyclers. A key policy thrust should be to achieve a systematic formalisation of this sector — the rag-pickers should be given an official identity, trained on environmentally safe scrap-handling practices and supported with a minimum wage.

However, the key aspirational social transformation should be to enable rag-pickers, with some assistance from the government, to eventually move up the value ladder and themselves become recyclers, thereby, exemplifying the true rags to riches entrepreneurial journey in this so-called uneconomic sector.

At an institutional level, the government may consider setting up of a national authority on material recycling, primarily as a body to promote recycling among public and private players, help recyclers adopt international best-practices and enable coordination, and harmonisation among existing policies and rules to achieve a high-performance recycling economy sooner than later.

Following successful examples in China, the government can also set up dedicated material recycling zones (MRZs) to help the recycling industries operate in a globally competitive fashion. However, ultimately consumer behaviour and business practices are the key in transitioning to a circular economy. Government and businesses should work together to create a system of incentives and disincentives to nudge citizens favourably to consume reused and recycled products.

Sujeet Samaddar is Senior Consultant, NITI Aayog, and Ajeya Bandyopadhyay is Partner, KPMG. Inputs from Susmit Dutta, Associate Director, KPMG.

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