According to a McKinsey report released on September 13, 2023, the market opportunity for India’s automobile parts industry in component circularity could be between US$ 3.8-5 billion by FY30, across three themes – material recirculation, circular product design, and repair, care, and refurbishment services.
‘Mobility 360 degree-Sustainability for Competitiveness’ was released at the 63rd annual meeting of the Automotive Component Manufacturers Association of India (ACMA). According to the report, material circularity may boost profits for companies by 10-20%, reduce costs by 5-10%, reduce the usage of virgin materials by 20-40%, and decrease carbon emissions by 50-70%.
According to a report by the World Economic Forum and Accenture, a car built under the circular economy model can reduce the lifecycle carbon emissions of the automobile industry by up to 75% by 2030.
Insufficiently organised recyclers, higher costs, low recovery rates (for e-waste and reusable parts), and demand for recycled products, as well as difficult-to-recycle components, are just a few of the obstacles that need to be overcome in order to promote material circularity in India, according to the McKinsey report.
Furthermore, according to the report, barriers could be tackled over time through supportive regulatory and policy support (such as the Vehicle Scrappage Policy, 2022), better recycling economics, and improvements in recycling technology.
Companies that employ circularity may encourage both collaboration and rivalry. Additionally, circularity may increase local resource availability and reduce supply-chain risk. Moreover, companies globally and in India are giving sustainability a higher priority as a result of the increased emphasis on the subject everywhere. The Science Based Targets initiative has verified decarbonisation goals adopted by more than 180 Indian companies.
ACMA’s survey of Indian auto suppliers earlier found that respondents find three themes relevant: New business opportunities, sustainability qualification-led growth, and sustainability-led cost reduction.