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By René Van Berkel, India Representative of the United Nations Industrial Development Organization (UNIDO), and Rajiv Ramchandra, Founder and Director, Recreate India Research Foundation (Re:CREATe)

Sectors with high job creation potential deserve specific support as India seeks to build back better from the COVID-19 pandemic. Remanufacturing provides a case in point as it makes good business sense, creates valuable jobs, and supports the transition to a circular economy. 

 

In 2017, the American National Standards Institute (ANSI) approved an industry standard that defined remanufacturing as “a comprehensive and rigorous industrial process by which a previously sold, leased, used, worn or non-functional product or part is returned to ‘like new’ or ‘better than new’ condition, from both a quality and performance perspective, through a controlled, reproducible and sustainable process”. The notion of equal performance is key to addressing customer perceptions that new is, by default, better.

Remanufacturing is already big business globally. The European Remanufacturing Network (ERN) estimated the value of remanufacturing in 2015 at just under €30bn in the European Union, followed by Japan (€3.8bn), Malaysia (€825m) and South Korea (€670m).

The ERN report states that remanufacturing in India is underdeveloped, and repair is more common. Most remanufactured IT products are printer cartridges, although the definition of ‘remanufacture’ can be somewhat variable. More than 30,000 businesses reportedly engage in some form of cartridge refilling or remanufacturing, but the sector is largely unregulated, quality varies, and counterfeiting is common, and it is thought that only about 70 firms remanufacture printer cartridges under reputable brands. Other known Indian business examples are in the heavy-duty and off-road (HDOR) sector including Volvo, which remanufactures construction equipment at its facility in Bangalore, and Cummins, which operates two remanufacturing facilities, including the ReCon India facility at Phaltan, Pune.

Remanufacturing is labour-intensive, since remanufacturing requires that products be disassembled and assembled, with rigourous refurbishing and testing in between. The UK’s Waste and Resources Action Programme (WRAP) estimated that reuse and remanufacturing create 8-20 jobs per thousand tonnes of unwanted products, compared to 5-10 jobs for recycling and as little as 0.1 jobs for waste products sent to landfill. There are no comparable figures for India. Remanufacturing though will require transformation of waste management into resource recovery, providing safer and more dignified jobs for those currently involved in the informal scavenging and recycling activities.

Remanufacturing is a practical approach to achieve resource efficiency and operationalize the circular economy. Resource efficiency is a priority for India. This was highlighted by the Indian government’s think-tank, NITI Aayog, in its 2017 Resource Efficiency Strategy. The Ministry of Environment, Forest and Climate Change followed up with a draft Resource Efficiency Policy issued in 2019.

 

UNIDO's René Van Berkel discussing the circular economy in India during the webinar: "Remanufacturing and the Circular Economy" on 23 September 2020.

A circular economy aims at changing the predominately linear take-make-use-throw economic model into a circular take-make-use-recover-retain model. Contrary to common perceptions, this goes beyond a recycling economy, and involves policy and action for changes in resource selection, greater efficiencies in resource use, and perpetual recovery and recycling. The circular economy offers a contemporary lens to review and innovate the way products and services are designed, manufactured, used and recovered, and indeed already provides a launchpad for cleantech innovators and start-ups in India and elsewhere.

From environmental perspective, remanufacturing goes beyond recovery and recycling, as it also retains the form, shape, and functionality of products, which when manufactured from either virgin or recycled material, require significant amounts of energy and create waste. Hence, the International Resource Panel (IRP), the global think tank on natural resources convened by the United Nations, speaks of nothing less than a ‘manufacturing revolution’ based on value-retention processes (VRPs), comprising remanufacturing, refurbishment, repair and direct reuse. The IRP found that compared to new manufacturing, remanufacturing can achieve 80-98% materials savings and a 79-99% reduction in emissions of greenhouse gases. The cost advantages of VRPs are conservatively estimated between 15 and 80% of the costs of new product.  

Remanufacturing has proven beneficial in diverse industries, such as automotive, aerospace, electronics and machinery. On the other hand, it is not equally applicable to all products as a way to solve waste generation challenges, climate impacts, and resource-use constraints. A modern and forward-looking manufacturing policy recognizes and achieves synergies between manufacturing and remanufacturing.

India is well tuned into recovering the utility and economic value of discarded and/or dysfunctional manufactured products and components. This has traditionally been driven by need or scarcity, with an acceptance that recovered products will have lower performance. Remanufacturing ‘industrializes’ this practice by designing products for multiple product use cycles while ensuring that the remanufactured product or component has equal if not superior performance compared to new ones. This is indeed an opportunity worth a concerted effort by industry, government and consumers as India endeavours to build back better from the current socio-economic crisis.

How remanufacturing develops in India is undoubtedly going to be unique to this nation, given the high level of informality and associated labour intensity in waste collection, scavenging, recycling and disposal. However, it has uncontested potential to create new jobs across skill categories, formalize parts of the waste management industry by transforming it into a resource management and recovery industry, and consequently to have a great impact the working conditions of those involved.

The potential contribution of remanufacturing to a circular economy and a green economic recovery in India was debated during a Re:CREATe/UNIDO webinar on 23 September 2020. The session recordings are available here.