Narendra Modi has a knack for coining catchy slogans. He gave us several during his election campaign. Most famous among them was Acche Din Aane Waley Hain, of course, but there were others: the promise of ‘minimum government, maximum governance’, a 5F strategy for cotton farmers (‘farm to fibre to fabric to fashion to foreign’), a 3S strategy to compete with China (‘skill, scale and speed’) and, in his impressive prime ministerial I-Day speech, the ‘Come, Make In India’ exhortation to global corporations.
But the slogan that struck a new chord was Modi’s call to Indian entrepreneurs to adopt a ‘zero defect, zero effect’ mantra in their products. ‘Zero effect’ is probably Modi’s first direct reference to the need to make things without causing environmental harm. I would suggest going some steps further and calling for a system that avoids industrial waste. That would not only mean producing with ‘zero effect’ but also consuming with little or no damage to the environment or waste of finite resources.
The concept of a ‘circular economy’ is not new. It dates back to the 1970s and owes its origins to the cycle of life in living organisms but it is only now when we risk irreversible depletion of the earth’s finite resources that it has received attention, particularly in the developed world. In a conventional lateral economy, producers take resources, make their products, sell them to the consumer, who uses them till their lifecycles are over and then discards them, resulting mainly in industrial waste. In a circular economy, the essence is all about prolonging the lifecycle of products; reconditioning them; and preventing the generation of waste.
In simple terms, in a circular economy, a company doesn’t sell its product to the consumer; instead it continues to own it while the consumer pays for using its services; and at the end of its life (or when the consumer doesn’t want its services any longer), the company takes it back and re-uses all the resources that went into it to recondition it. Example: In some municipal facilities in Europe, Dutch lighting and electronics maker Philips doesn’t sell anything to its consumers and merely installs the product (equipment), which it continues to own, and provides the consumer with services (light) that the latter pays for; and at the end of the lifecycle, the resources that make up the equipment are re-used by the company.
Sweden’s H&M, a mass retail apparel brand, has a worldwide policy of offering consumers who return its old garments discounts on new ones; and it reconditions the old ones to sell at cheaper prices, thus prolonging the lifecycle of the fabrics and fibre used. In the US, many telcos which bundle mobile phones with their services do that with their phones. And even high-end luxe brands have adopted the practice: A.P.C., a French brand known for its understated but fashionable jeans, takes back used pairs from consumers, repairs them if necessary, and sells them under what is branded a ‘butler service’ (the butler being the consumer who wore them in for the next buyer) for which it actually is able to charge a price higher than the original price of the new pair!
In India too there are examples: Maruti’s TrueValue service, which reconditions old vehicles, sells 300,000 pre-used cars a year, more than the total sales of new cars of many of its competitors; and the emergence of e-commerce sites has helped people sell all kinds of used stuff, which other people can buy and use.
A truly circular economy, however, would need both producers and consumers to work together. Makers of washing machines, cars, fridges and so on would have to make things whose resources are designed to be recycled; and consumers would have to change their habits from paying to own these to doing so for only using them. Then we would truly have a ‘zero effect’ economy.