Advanced International Journal for Research

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Circular Economy Adoption in India: A Comparative Study of MSMEs and Large Industries

Author(s) Mrs. Vani Y D
Country India
Abstract India's shift toward a circular economy (CE) is unfolding unevenly across its industrial base. This study compares CE adoption between 210 MSMEs and 100 large industry firms (N=310) across six practices—eco-design, waste valorization, reverse logistics, recycled input use, energy recovery, and material substitution. Large firms outperform MSMEs on every practice, with an average adoption gap of 33 percentage points (56.5% vs. 23.7%). The gap is widest in eco-design (36 pp) and recycled input use (34 pp)—capital-intensive practices requiring upfront investment MSMEs typically lack. Among eight surveyed barriers, financial constraints (mean 4.42/5) and lack of technical know-how (4.11/5) ranked most severe for MSMEs, ahead of weak supply chains, regulatory uncertainty, and low managerial awareness. An independent samples t-test confirmed a highly significant difference in CE adoption intensity by firm size (t(308) = 14.27, p < 0.001), and a chi-square test confirmed firm category is significantly associated with high vs. low adoption classification (χ² = 84.6, p < 0.001). Firm size, however, is not fully deterministic — roughly 25% of MSMEs already qualify as high adopters.
The study proposes a conceptual framework linking regulatory, financial, and managerial drivers to CE outcomes, moderated by firm size. Recommendations include blended finance instruments, cluster-based technology transfer from large anchor firms, simplified EPR compliance pathways for smaller firms, and targeted capacity building—arguing that closing India's circularity divide requires differentiated, not uniform, policy design.
Keywords Circular Economy, MSME, Large Industry, Sustainable Manufacturing, India, Extended Producer Responsibility, Comparative Study
Field Arts
Published In Volume 7, Issue 5, September-October 2026
Published On 2026-09-26
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