– By Anirudh Shingal and Chinmay Joshi
Technological advancements and the ICT revolution led to the unbundling of the manufacturing process, outsourcing of economic activities and the rise of global value chains (GVCs) in the 1990s. However, climate change, uneven development, the Covid-19 pandemic and geopolitical tensions have altered the narrative in favour of making value-chains more sustainable, resilient and regional. In this context, the circular economy (CE) has been discussed as a concept and a model that contributes towards closing material loops and helping design a less crisis-prone, resilient economy that can also create new job opportunities at home.
The CE framework was traditionally concentrated in countries having formal economies with robust regulatory mechanisms, especially in the ‘Global North’ i.e. Europe and the US. For instance, the consumption of recycled material in Europe is greater than in other parts of the world, with a circularity rate of 11.8% in 2023. However, CE initiatives are now being adopted extensively by economies in the ‘Global South’, including low-income countries functioning mostly within the unorganised sector. In countries such as Brazil, India, and Tanzania, for instance, the necessity-driven based CE model emphasises that locally-anchored and closely-interconnected formal and informal practices play a key role in sustaining the value of goods and material, driven by financial need and the potential for revenue generation (Korsunova et al. 2022). The adoption of such practices by countries in the ‘Global South’ assumes greater significance going ahead. Similarly, in the context of reorienting GVCs, there is a need for framing appropriate policies and relevant business models pertaining to CE aimed at achieving desired sustainability objectives.
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Consistent with this realization, policymakers and enterprises are increasingly focusing on the idea of circular supply chains (CSC) wherein attention is given to the continuous reuse of materials, thereby minimizing waste and attaining a more optimum utilization of resources compared to the conventional linear model. The CSC model thrives to extend the lifecycle of a product and materials with the help of effective waste management,
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