South Asia’s factories still revolve around a simple idea: make more, sell fast, throw away what’s left. With resources tightening and climate pressure rising, that logic is starting to look expensive. The question now is whether companies in the region can redesign their production process without giving up the growth they’re chasing. A transition from linear to circular economy models involves shifting production from a take-make-dispose approach to one that focuses on eliminating waste through reuse and recycling. It also requires reducing the consumption of finite resources. Changing manufacturing processes is crucial, given the importance of sustainability in light of climate change, environmental distress from human impact, and depleting natural resources. There has been significant growth in the adoption of Circular Economy practices in countries like India. However, their adoption is lower in other developing South Asian nations, such as Pakistan, where industrial processes still largely follow conventional methods. Certain factors obstruct the adoption of circular methods by industries in these regions. However, by tackling these issues and closely studying corporations that are successfully transitioning to a circular mode of production, feasible solutions can be proposed. A transition to a circular economy in South Asia sounds promising, but the reality on the ground is far more complicated. Most current fiscal and trade policies are based on a linear model of production; hence, a shift to a circular economy involves multiple stakeholders along a supply chain. For instance, in the transition to circular production, new regulations like EPR (Extended Producer Responsibility) or eco-design guidelines have been introduced. But due to a limited availability of technologies, technical expertise, and formal networks that aid in material sourcing as well as traceability of products, industries are unable to comply with such requirements. And because virgin materials stay cheaper and more reliable, companies are discouraged from experimenting with circular models in the first place. Policies also differ from country to country, which makes it difficult for companies – especially those that work across borders – to know exactly what standards they need to follow. In developing countries such as Pakistan, Nepal, and Bhutan in South Asia, formal Micro, Small, and Medium Enterprises (MSMEs) constitute approximately 33 percent of the GDP, which is an underestimation considering it does not include informal MSMEs. This poses yet another challenge for South Asian countries, as more than 85 percent of these MSMEs lack access to financing and thus find little incentive to invest in circular economy solutions, like refurbishing machinery, reverse-logistics systems, or water-reuse technologies, which tend to have long returns on investment, and because MSMEs are unable to scale them. Overall, these issues show that the shift to circularity in South Asia isn’t only about introducing new technologies. It requires better coordination between policy, infrastructure, and market incentives - none of which fully exist yet. Learning from companies like IKEA IKEA’s business model helps show how a company can change its system from linear to circular without harming its business. Over the past few years, they have introduced programs that make it easier for customers to repair or reuse products instead of throwing them away. For instance, their ‘Buyback & Resell’ service runs in 28 markets, and in FY24, nearly 495,000 pieces of furniture were returned. They also have a spare parts program, which provided more than 24 million small parts in one year, along with almost 200,000 larger pieces like fronts and cushions. Their design approach is also changing: products are made to be disassembled more easily or use standardized components. It is interesting that IKEA has grown as a business while reducing emissions. Their overall value-chain emissions dropped 28% compared to FY16, even though their commercial footprint expanded. Before adopting these strategies, IKEA mainly worked through a one-off sales model. With buyback schemes, wider spare-parts access, and recycled-content goals, IKEA’s operations became far more resilient. Meanwhile Lucro Plastecycle Private Limited (Lucro) is a homegrown Indian company that was established in 2012 as a supplier of plastic products. By 2016, the company had begun transitioning to a circular model by launching a buy-back program for plastic waste and setting up recycling lines as a means of recycling plastic to manufacture flexible packaging products such as shrink wraps, polybags, and other primary, secondary, and tertiary packaging for various industrial applications. Additionally, through external funding from Circulate Capital, a circular economy investment management firm, Lucro was able to scale its operations by expanding collection centres, commissioning other industries for flexible plastics, and establishing new recycling facilities to increase processing capacity. This funding also enabled Lucro’s partnership with Dow to develop post-consumer recycled (PCR)‑based polyethylene (PE) film solutions in India. Lucro further enhanced efficiency through the adoption of Satma CE, a software that incorporates QR-based traceability to make supply chains transparent and traceable. Today, the company is the largest supplier of post-consumer recycled plastic products, which has led to Hindustan Unilever acquiring a 14.3% stake, marking a crucial step forward in accelerating plastic circularity at scale in India. Both IKEA and Lucro show that circular transitions work best when they combine design changes, customer services, and reliable material systems. Companies in sectors like furniture, home appliances, or consumer goods can start by improving repairability. Even limited buy-back or refurbishment schemes can be piloted in major urban centres. The Lucro model shows how companies can partner with recyclers or invest in collection networks to access high-quality PCR materials. South Asian industries can use similar long-term offtake agreements to reduce dependence on virgin inputs. South Asia is gradually introducing rules like plastic bans or EPR guidelines. Companies can stay ahead by aligning design with recyclability standards and using digital tools for traceability. Sectors like textiles and denim already generate large amounts of post-industrial waste, so creating circular hubs can turn these waste streams into new revenue. Overall, adapting IKEA’s and Lucro’s strategies is about using their principles, i.e, repairability, reliable recycled material supply, and service-based circular models, to fit local economic and social realities. Because in the end, the region’s manufacturing future will be defined not by how much it produces, but by how much it refuses to waste. References: [1] Ellen MacArthur Foundation. Circular Economy Introduction – Overview. https://www.ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview [2] Rasheed, Kumeel; Syed Saad; Ahmad Zaland; Muhammad Waqas Khan; Zawar Ali; Muhammad Haris; Syed Ammad; and Touseef Sadiq. “Circular economy and critical barriers: Mapping the pathways and success metrics for sustainable circular success in industrialised South Asian developing nations.” Results in Engineering, vol. 24, 2024, Article 102995. https://doi.org/10.1016/j.rineng.2024.102995 [3] PwC. The Role of the Public Sector in Driving a Circular Economy in Southeast Asia. https://www.pwc.com/gx/en/services/consulting/south-east-asia-consulting/public-sector-driving-circular-economy-in-southeast-asia.html [4] Ayyagari, Meghana; Thorsten Beck; and Asli Demirgüç-Kunt. “Small and Medium Enterprises Across the Globe: A New Database.” World Bank, 2003. [5] IFC. Two Trillion and Counting: Assessing the Financing Gap for Micro, Small, and Medium Enterprises. Washington, D.C., 2010. [6] IKEA. Sustainability Report FY24 – Buyback & Resell; Spare-Parts Programme; Circular Design Principles. https://www.ikea.com/global/en/images/IKEA_Sustainability_Report_FY_24_2025_02_06_0aaa 025249.pdf [7] IKEA. Sustainability Report FY24 – Overview Page (Emissions & Decoupling Trends). https://www.ikea.com/global/en/our-business/reports/sustainability-report-fy24-250130/ [8] Lucro Plastecycle Private Limited – Company Overview. https://www.lucro.in/about [9] Circulate Capital. (2022). Follow-on Investment into Lucro: Expansion of Capacity and Collection Centres. https://www.circulatecapital.com/wp-content/uploads/2022/11/220727-Circulate-Capital-announ ces-Lucro-follow-on-investment.pdf [10] Circulate Capital – Homepage. https://www.circulatecapital.com/ [11] Dow × Lucro. Post-Consumer Recycled (PCR) Polyethylene Film Solutions in India (2021). https://corporate.dow.com/en-us/news/press-releases/dow-and-lucro-launch-post-consumer-recyc led-pcr.html [12] Satma CE – Traceability Platform. https://www.satmace.com/ [13] Hindustan Unilever. (2025). Board Approves 14.3% Equity Stake in Lucro to Strengthen Flexible Plastics Circularity. https://www.hul.co.in/news/press-releases/2025/hul-board-approves-investment-to-strengthen-fle xible-plastics-circularity/ The article does not necessarily reflect the opinion of Business Recorder or its owners.