Circular Economy and Indian SMEs: Systematic Review of Practices,  Progress, and Financial–Environmental Outcomes

Saif  Maurya; Rajesh  Viswakarma

doi:10.21844/crr.v3i02.1148

Saif Maurya Research Scholar, Department of Commerce, Mahatma Gandhi Kashi Vidyapeeth, Varanasi.
Rajesh Viswakarma Assistant Professor, Pt. Deen Dayal Upadhyay Rajkiya Mahavidyalay, Varanasi

DOI: https://doi.org/10.21844/crr.v3i02.1148

Keywords: Circular Economy, Small and Medium Enterprises (SMEs), Financial Performance, Environmental Impact, Sustainability

Abstract

The need to transition from linear to circular business models is becoming a necessity and a strategic value for India's small
and medium enterprises (SMEs) because of limited resources, environmental conditions, and regulation. (Ellen MacArthur
Foundation, 2016; Rizos et al., 2016; Rosa & Paula, 2023; Nemilentseva, Tariq, Tariq, Aghajani, & Torkkeli, 2024). This
study presents a review of the present scenario of circular economy (CE) practices in manufacturing SMEs in India and the
reported financial and environmental benefits of CE in the emerging economies (Fernando, 2024). Combinations of the
words circular economy, SME(s)/MSME(s), financial performance and environmental performance were applied for the
structured searches in the main academic databases (Wiley Online, Web of Science, Scopus, ScienceDirect, and
SpringerLink) and selected policy portals from 2015 to 2025 were screened. Studies were chosen and coded into a final set
of studies for evidence synthesis on CE practices, drivers and barriers, performance outcomes and policy frameworks based
on pre-defined inclusion and exclusion criteria.
Indian SMEs are still in the initial phase of adopting CE and are progressing rapidly with most entities implementing basic
initiatives like cutting waste and material recovery, along with relatively few in the country have applied more advanced
practices like remanufacturing, product-service systems or fully circular supply networks (Mathivathanan et al., 2022;
Rosa et al., 2023; (Trivedi et al., 2025)). The scholarly work, CE adoption is associated with cost savings, efficiency, and
environmental performance; evidence has been found to be variable and the way rigour is measured has also been quite
different. The review also highlights enablers and the ongoing financial, technological, and institutional hurdles and
provides a set of suggestions for the empirical studies and policy design in Indian SME context in the future.