This has the potential to transform India’s extensive MSME network into a distributed source of innovation, promoting waste minimisation, efficient resource management, and green employment opportunities.
Why MSME–corporate collaboration matters?
The bustling network of around 65 million MSMEs are a massive contributor to our nation’s prosperity, fuelling about 30 per cent of economy, pumping out a third of our manufactured goods and making nearly half of exports. Most importantly, they provide 110 to 280 million jobs! Now, here’s a key point about these businesses: they typically don’t invest in big, expensive machinery, but they do hire many. This makes them a bit sensitive to sudden swings in material prices. Yet, this very setup also means they’re perfectly poised to embrace smart, eco-friendly approaches, like fixing things, reusing materials, and remaking products, if they get the right boost in technology and financial support.
Imagine the power of big companies teaming up with these smaller partners. The larger players could hand over tricky design puzzles – like how to make products lighter, easier to recycle, or even use materials from nature, or smart ways to manage product returns. This kind of collaboration isn’t just smart business; it could really spearhead our shift towards more sustainable, circular practices.
Tie-up to operationalise circular economy
Here are four ways big companies can team up with smaller businesses to build a circular economy:
Shared Industrial Projects: Factories like steel mills or chemical plants can partner with smaller companies. Instead of tossing out things like waste heat, ash, or dirty water, they can team up to turn these leftovers into valuable new products – like building materials, chemicals, or fertilisers. This involves developing the processes together and ensuring quality.
Product Service and Repair Networks: Companies that make things like electronics, machines, or vehicles can design them so they’re easy to take apart and reuse. Then, certified smaller businesses can step in to handle repairs, refresh old products and sell them on a trusted second-hand market.
Waste Collection and Recycling Partnerships: Businesses that sell directly to consumers and are responsible for their products after use (like those with packaging or electronics) can partner with networks of specialised, smaller companies. These partners would collect, sort and process items like plastics, old electronics and batteries for safe recycling. They’d also work together to find better ways to recover materials and keep workers safe.
Local Eco-Friendly Zones: Communities or areas with many businesses can create shared centres for testing, recycling, treating wastewater and checking how efficiently resources are used. Here, bigger companies, special local groups, and smaller businesses would invest together in new ideas, share what they learn, and then apply successful solutions throughout the whole area.
These partnerships aren’t just about technical research; they also need new ways of organising and doing business. This includes using digital tools to track materials, smart agreements for paying based on results, and new ways to measure the value remaining in products throughout their journey.
Policy, finance and governance levers
We have a national roadmap for a circular economy, detailing how businesses can embrace more sustainable models. The 2024-25 budget also has provisions to boost research and development, open up access to funding, and help MSMEs and start-ups go digital. We can easily link these efforts to achieving circular economy goals by setting smart criteria for eligibility and offering rewards tied to actual positive outcomes.
Beyond policies, creating innovative organisational structures is also key. NITI Aayog’s idea for “Institutes for Collaborations” and improving “Common Facilitation Centres” is brilliant. It suggests building neutral spaces where big companies, small businesses, academics, and government bodies can come together. They can jointly create and test new solutions, share their intellectual property, and reduce the risks involved in new ventures.
A forward-looking agenda for industry leaders
Global customers are increasingly judging suppliers on Environmental, Social and Governance (ESG) performance and sustainability. This creates an opportunity for Indian companies to help their MSME partners build greener capabilities to stand out globally while safeguarding local jobs and incomes. Companies must focus on three priorities: allocating more R&D funds to green innovation; treating MSMEs as strategic partners rather than low-cost vendors; and leveraging government funding, industry platforms and policy support. Meanwhile, MSMEs must modernise operations, strengthen quality systems and adopt digital tools to contribute meaningfully and gain efficiency, resilience and adaptability. Together, they can enable scalable, sustainable business models for long-term green industrial growth.