Top 10 Circular Economy Strategies Boosting Sustainability in India’s EV Sector

India’s transition to electric vehicles (EVs) is gaining extraordinary momentum in 2025, driven by a national need to decrease emissions, decrease oil imports, and be at forefront of clean transportation. However, there is an environmental cost to that transition. Electric vehicles require key raw materials such as lithium, cobalt, and rare earth elements – all materials that are still finite, expensive to extract, and harmful to the environment if unrecyclable.

This is where the idea of a circular economy comes in. The circular economy with electric vehicles involves practices with the intent to extend product life, allow reuse, recycle, and then reduce the total demand for material. By establishing circular practices as the foundation for electric vehicle manufacture and use, India could support the sustainability of the EV industry, reduce waste, and improve resilience in the future.

This article examines the top 10 circular economy strategies that are greatly enhancing sustainability in India’s electric vehicle sector.

1. Battery Reuse and Recycling

Battery waste is emerging as one of India’s most pressing issues in the EV transition. By the year 2030, more than 50 GWh of lithium-ion batteries are anticipated to reach their end-of-life. Attero Recycling, Lohum Cleantech, and Exide Industries are pioneering initiatives in lithium recovery, cobalt recycling, and repurposing batteries for energy storage.

According to the Battery Waste Management Rules 2022, Extended Producer Responsibility (EPR) requires OEMs to gather and recycle discarded batteries. Repurposed EV batteries are now being used for stationary energy storage in telecom towers and solar microgrids, promoting both a circular economy and improved sustainability in the EV sector.

2. Remanufacturing of EV Components

Unlike recycling, remanufacturing involves restoring used EV parts—like electric motors, gearboxes, and controllers to like-new condition. This method conserves raw materials, limits energy consumption, and reduces emissions by over 60% compared to making new components. Indian startups are also beginning to enter the remanufacturing space, particularly in Bengaluru and Pune (both automobile hubs).

As we see an increase in demand for affordable EV repairs and maintenance, this circular economy model of remanufacturing is proving to be a critical element of sustainability in the EV space.

3. Design for Disassembly and Reuse

Manufacturing electric vehicles that can be deconstructed, repaired, and improved allows for the lifespan of the vehicle to be extended and allows for extraction of materials. Modular design concepts are being used by companies such as Euler Motors, Simple Energy, and Okinawa Autotech, allowing for component reuse.

This strategy will also support the eventual environmentally-friendly disposal of EVs at end-of-life stages by allowing component recovery; such as battery packs, electric motor and control systems. This is an important strategy to begin working towards a circular economy and continue sustainable approaches in the EV sector.

4 Battery-as-a-Service (BaaS) and Leasing Models

Battery-as-a-Service (BaaS) enables users to rent batteries and not to own them – reducing capital expenditure in the EV and ensuring the batteries are being used correctly when they own them and as they are returned when finished.

Innovative companies like SUN Mobility, Battery Smart and Lithion Power have created battery-swapping and battery leasing systems that allow for full battery utilization. Using a collaborative economy model, innovators are not just increasing the usability of their EV’s, they are also making the EV ecosystem more sustainable by minimizing waste and increasing battery utilization.

5. Urban Mining and Resource Recovery

Urban mining tapping resources from discarded electronics is already becoming a lucrative business in India. Bengaluru-headquartered Metastable Materials and Lohum Cleantech use chemical and mechanical means to recover over 90% battery constituents.

The application of urban mining reduces dependence on mineral import, mitigates the environmental impact of raw material extraction, and directly promotes the development of a strong circular economy and sustainable EV industry.

6. Refurbished EV Market

As early-generation EVs reach end-of-life, startups are refurbishing electric two-wheelers, extending their usability and reducing e-waste. Platforms are emerging that offer certified refurbished EVs with upgraded components and warranties.

This strategy reduces raw material demand, lowers costs for consumers, and diverts discarded EVs from landfills. By reintroducing used vehicles into circulation, this growing refurbishment ecosystem strengthens both the circular economy and sustainability in the EV sector.

7. Green Manufacturing Practices

Manufacturers are increasingly adopting low-carbon, energy-efficient, and zero-waste production lines. Tata Motors and Mahindra Electric are integrating solar panels at their EV plants, using rainwater harvesting, and replacing virgin plastic with recycled alternatives in interior trims.

These green manufacturing approaches reinforce the circular economy by minimizing resource inputs and reducing environmental impact—two major pillars of sustainability in the EV sector.

8. Reverse Logistics Infrastructure

Effective reverse logistics systems are essential for retrieving end-of-life EV batteries, electronics, and vehicle shells. OEMs are partnering with logistics startups and recyclers to build pan-India networks for battery collection and recycling.

With the EPR framework pushing accountability, India is witnessing the rise of collection hubs in cities like Delhi, Mumbai, and Chennai. These systems are essential to building a functional circular economy and ensuring long-term sustainability in the EV sector.

9. Shared Mobility and Vehicle Lifecycle Extension

Shared mobility platforms such as Yulu, and Bounce Infinity are reducing the total number of vehicles required on Indian roads. EVs in these fleets are used more intensively and maintained to extend life cycles, often beyond 8–10 years.

Software upgrades, OTA diagnostics, and predictive maintenance enable a longer and more efficient service life. This strategy is fundamental to reducing lifecycle emissions and promoting sustainability in the EV sector through the principles of a circular economy.

10.Use of Bio-Based and Recycled Materials in EVs

Incorporating bio-based and recycled materials like bamboo composites, hemp fibers, and recycled PET bottles in seats and dashboards is becoming more common. MG Motor, Hyundai, and Mahindra are exploring plant-based or circular polymers to reduce fossil-derived inputs.

Such materials are more biodegradable and reduce the carbon intensity of EV interiors. As India’s material innovation ecosystem matures, this trend will significantly contribute to a resilient circular economy and improve the sustainability in the EV sector.

Policy Boost: Strengthening India’s Battery Circularity Ecosystem

In tandem with the PLI-ACC scheme, the Union Budget for FY2025–26 introduced several transformative measures aimed at accelerating domestic battery manufacturing and reinforcing sustainability in the EV sector through a circular lens. One of the most impactful announcements was the exemption of Basic Customs Duty (BCD) on 35 additional capital goods specifically used for lithium-ion battery production. This targeted relief is designed to significantly reduce setup costs for manufacturers and boost domestic value addition in the EV supply chain.

The Union Government’s emphasis on self-reliant advanced battery ecosystems directly supports the circular economy, as locally produced cells can be designed with second-life reuse and recycling efficiency in mind. This move also complements the strategic goals of minimizing material imports and promoting reuse and remanufacturing—central tenets of sustainability in the EV sector.

Furthermore, the Ministry of Heavy Industries (MHI) remains committed to creating an enabling environment for innovation. The MHI’s focus on strengthening the domestic supply chain, attracting Foreign Direct Investment (FDI), and supporting technology localization aligns perfectly with India’s ambition to lead in battery recycling, materials recovery, and remanufacturing.

This proactive government initiative has already begun to yield results. In addition to the PLI beneficiaries, more than 10 private players have initiated plans to build over 100 GWh of additional battery cell manufacturing capacity across India. These investments not only bolster EV battery availability but also build the foundation for closed-loop manufacturing systems that are vital to the circular economy.

Data Box: Circular Economy in India’s EV Sector (2025)

While the circular economy is gaining traction, India still faces roadblocks: a lack of formal recyclers, limited consumer awareness, and insufficient standards for second-life batteries.

There is a pressing need for R&D investment in circular technologies, standardized protocols for refurbishment, and integrated producer–recycler platforms. Multi-stakeholder collaboration across government, OEMs, startups, and academia is key to scaling sustainability in the EV sector.

Conclusion

The circular economy is no longer an optional concept it is a necessity for achieving sustainability in the EV sector. India’s fast-growing EV industry must move beyond a linear “take-make-dispose” model and embrace resource efficiency, reuse, and regeneration at every stage.

By accelerating these top 10 strategies, India can create a more climate-resilient, job-creating, and globally competitive electric mobility ecosystem. If scaled effectively, these circular solutions can position India as a global leader in sustainable e-mobility.