♻️ The Business of Plastic Recycling in India ♻️
Each week we share business ideas and opportunities that you can use to build your next big business. You’ll also find tweets, articles and a lot more to keep you updated on the latest business trends.
This week you will find:
♻️ The Business of Plastic Recycling ♻️
TID’s 3-2-1 (3 Tweets, 2 Podcasts, 1 Article)
TID’s Book Recommendation
♻️ The Business of Plastic Recycling ♻️
Our post on the Circular Economy two weeks ago was the first step in understanding the nature of waste management in India. This might seem like an unsexy topic but we’re seeing big businesses being built in the industry along with a tremendous amount of money flowing into it.
Today we’ll do a deep dive on the current and future state of Plastics Recycling in India and in a few weeks we’ll look at E-Waste Recycling.
Why do we need Plastic Recycling in India?
Do we need to say more?
Despite the amount of plastic waste we see across the country, it’s estimated that 60% of the plastics are recycled - less than 10% is successfully recycled in the US. However, our garbage dumps are filling up and the government believes that we can do better.
Plastic Waste Management (Amendment) Rules, 2022
Released on 16th February, 2022 by the Ministry of Environment, Forest and Climate Change, these are the latest rules that dictate how plastic waste is to be handled in India.
Important Takeaways
Extended Producer Responsibility (EPR) casts an additional responsibility on the producer, importer, and brand owner (platforms, marketplaces, supermarkets, retail chains) to adopt environmentally sound approaches to dispose of plastic waste, at both pre-consumer and post-consumer plastic packing levels.
The Extended Producer Responsibility reach their maximum by FY2028 by when plastic producers, importers & brand owners need to figure out their plastic recycling supply chains. There are different calculations for producers, importers, and brand owners and you can find all of them in the rules. Here are two examples from the rules on how the targets are calculated.
Brand Owner owners who fulfill their Extended Producer Responsibility targets can sell the surplus to other Producers, Importers & Brand-Owners thus creating a secondary market.
Central Pollution Control Board will lay down the rules for environment compensation from Producers, Importers & Brand-Owners who don’t meet their targets.
The rules also encourage Producers, Importers & Brand-Owners to develop collection and segregation infrastructure of plastic packaging waste.
Essentially, the Extended Producer Responsibility is trying to force the producers, importers and brand owners who use plastic to start thinking from a circular economy perspective instead of the traditional linear economy.
Additionally, SEBI has published new rules for the 1,000 biggest public companies to published ESG reports. Part of these reports will include a section on plastic usage and recycling to which all the largest businesses in India will have to comply.
Plastic Recycling Value Chain in India
The flow chart below shows the value chain of the entire plastics industry in India. You can see that the recycling players play a critical role betwen the end-users and the plastic processors. They take plastic waste from consumers and break it down into a raw material that can be used by the plastics processors. But how the recyclers even receive the plastic waste? Let’s take a deeper look at that supply chain.
The graphic below is an illustration of the plastic recycling value chain in Bengaluru. The number of sources, collectors and aggregators of plastic waste will make the Extended Producer Responsibility especially difficult for large producers, importers, and brand owners.
This is where Producer Responsibility Organisation (PRO’s) play their part - they are the ones who can take responsibility for the collection and channelling of plastic waste to ensure that the waste is handled without harming environment. PRO’s assist the producers with –
Achieving collection targets,
Establishment of collection mechanism such as door to door collection,
Implementation of buy back/take back
Establishment of collection centers/points this may include setting up of collection godowns or operating through warehouses as per the guidelines issued by Central Pollution Control Board ('CPCB'),
Logistics arrangements,
Ensuring traceability of the e-waste collected and channelized & disposal of processed waste & end of life plastic waste,
Ensuring Environmentally sound dismantling and recycling,
Conducting awareness programme among consumer's/bulk consumers/producers for collection and channelization waste,
Helping producers in filing of quarterly/annual returns as per the rules,
Provide an extended producer's responsibility plan as legally required.
Players in the Plastic Recycling Market
We’ll break up the players into 3 segments:
PRO’s or Producer Responsibility Organisation
Tech Platforms for Buying & Selling Recyclable Goods
Bioplastics
Others
Producer Responsibility Organisations
Nepra - 90cr revenues, 3cr profit in FY20 - largest collector and sorter of dry waste in India, partnering with more than 1,700 waste pickers and collectors.
GEM Enviro Management - 25cr revenues, 20% net profit in FY21
Lucro Plastic - 17cr revenues
Bintix - raised $450k - provide a scheduled recyclable collection of dry wastes and sent to Pollution Control Board.
Tech Platforms
Recykal - raised $24 million - 66cr revenues in FY21 - digital exchange for Brands to find and transact with PRO’s and Recyclers for EPR fulfillments.
Banyan Nation - raised $7.4 million - uses technology to integrate thousands of informal sector last mile collectors into its supply chain to recover post consumer as well as post industrial plastic waste.
Rapidue Technologies - 21cr revenues, 1cr profits - platform to buy and sell recyclables.
Bioplastics
Sixteen companies in India have permission from the Central Pollution Control Board to make bioplastics. Most bioplastics produced globally (only 2% of total plastic production) are made from the byproducts of food crops, and are thus expensive. Almost all raw material for bioplastics, like PLA pellets, is imported by Indian manufacturers today.
Dr. Bio - Bioplastic From Corn Starch That Composts in 6 Months
Bio-Plastobag
Others
Recity - Compliance Management for brand owners through a platform with PRO’s and Regulatory authorities
Ishitva Robotics - raised $1 million - really cool robots to help with plastic sorting and IoT Enabled Smart Bins.
Sri Chakra - 11cr revenues in FY20 - plastic recycling producing recycled flakes.
Opportunities in Plastic Recycling
Traceability is going to be key for EPR rules to work in India. However, how will we trace back the origins of plastic with the complicated supply chains for recycled plastic in our country? This is where tech solutions will come into play - there are already several plastic processors working on this including our previous guest, Akhilesh Bhargava. You can listen to him talk about it towards the end of this episode.
Technology Solutions to improve efficiencies in sorting, cleaning and processing recyclable plastic. Once waste plastic reaches a recycling center, it has to go through a lot of processing - how can you make this easier? These machines can also be exported.
PRO’s for peri-Urban & Rural Areas. PRO’s, understandably, are currently focused on urban locations because of the density of plastic waste. However, as EPR rules tighten, peri-Urban and Rural Areas will also become catchment areas for plastic waste collection. The biggest challenge will be to build the supply chains for the waste collection.
Building a Certifying Organisation for plastic recycling. From a consumer perspective, we’ve never seen a plastic recycling certification that we trust other than the generic 100% recycled logo. The process of building this organisation would involve building consumer awareness on the one hand and onboarding brands on the other hand. Capital intensive but could be very profitable.
Using Technology to further connect the value chain. There’s a reason the technology platforms have received so much funding - the value chains are broken and require technology to improvement communications and connections.
Bioplastics manufacturing for different applications. The plastics industry is diverse amongst processors because end users have specific applications such as pennets for storing fruits or packets for pharmaceuticals. Each of these applications will have some demand for bioplastics.
Learn More about Plastic Recycling
3 Tweets
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2 Podcasts
India and the Future of Space Stations by All Things Policy
Long time readers and listeners know that we love talking about the Private Space Sector in India. This is an interesting conversation on the future of Space Stations in the world and how India could be part of the future. The Podcast concludes that Russia would be an important part of India’s space station future - however, recent events may hamper that future outlook. Another discussion on the impact of recent events on global space programmes including the ISS.
The Journey of Building Fratelli Wines to 100 Cr+ in Revenue ft. Gaurav Sekhri by The Indian Dream
An episode we’ve been waiting to record and release for a long time. Fratelli Wines has been one of the pioneers of building Wine culture in India. Listen to the episode to learn:
🍷 The process of making wines.
🍷 How did Fratelli's Journey start in 2006?
🍷 How is wine distributed across the country?
🍷 Why wine marketing and distribution is a slow game?
🍷 How to create awareness without using traditional marketing?
🍷 How did Fratelli Wines market itself in the alcohol beverage category?
Bonus - Cadence: Software Behind Semiconductor Design
We promise, this is the last Podcast about Semiconductors. This is a fantastic breakdown of the entire value chain of Semiconductors from designing to manufacturing. Provides us with questions on where India can build semiconductor expertise with the Rs. 76,000 crores it plans to deploy.
1 Article
High-Stakes Insect Farming: How to Breed a Better Bug
Alternative farming has been a hot topic for the past several years. On the Podcast and Newsletter, we’ve explored mushrooms, hydroponics, seaweed, and more but we’ve never explored insect farming. Insects are a shockingly good source of protein and far more environmentally friendly than traditional protein sources because of their lower requirements for food & water along with reduced methane emissions. INSECTIFii and Freshrooms LifeSciences are a few examples of insect protein startups in India - but for now they’re focused on providing alternative foods for poultry and fish farming.
TID’s Book Recommendation
Scaling Up: How a Few Companies Make It...and Why the Rest Don't
Probably one of the best business books we’ve ever read. And we have the author scheduled for a recording in Late April - stay tuned for a great episode.
Why do we love this book?
📚 Practical guide and templates to help scale your business.
📚 Holistic approach to building businesses including sections on People, Strategy, Execution & Cash
📚 Unlike other business books, it never feels like ‘it could’ve been a blog’.
📚 Dozens of book recommendations to deep dive into particular topics.
📚 Not Abstract - clear understanding of what it takes to run a business.
That’s it from us this week! Share this with your friends, family and colleagues who want to stay on top of Market Trends and Business Ideas & Opportunities!
Until next week!
Sahil & Sid