Imagine a city where trash isn’t trash, energy isn’t wasted, and economic prosperity isn’t achieved at the cost of human wellbeing. A city where every rupee invested in infrastructure yields returns not just in roads and buildings, but in health, jobs, equality, and dignity. Smart city projects promise exactly that. But all too often, their economic potential remains half-realized because they continue to rely on linear models of “take, make, waste.” Without integrating a circular economy, smart growth becomes extractive, unequal, and environmentally costly. India stands at a crossroads: its Smart Cities Mission, with hundreds of projects and Rs 150,000+ crore already committed, can become a laboratory of circular growth that redefines human development.
Cost Efficiency & Green Growth: Building for Less, Extracting More Value
Considerable savings are envisaged through a smart city founded on circular economy principles. The opportunity on a global scale is gigantic: The World Economic Forum estimates that by 2030, circular business models could add USD 4.5 trillion to the global economic output by cutting waste, better using resources, and introducing new markets.
Take Amsterdam’s circular transition for example: it has managed an ~18% decline in the use of non-renewable materials from 2016 to 2022; recycling rates are estimated at 60%, with a near-term target of 65% by 2025 (PIB, 2025; WEF 2025). Procurement is turning circular, with an increasing requirement that any new public project must minimize use of virgin materials and eventually aim for 100% circular procurement by 2030.
These interventions translate directly into genuine savings in levels of raw material, energy, carbon emissions, and maintenance at a municipal level. For example, Amsterdam's public spaces budget of ~85 million Euro per annum involves substantial use of materials; shifting to circular maintenance and reuse has already begun cutting costs and emissions.
India too has enormous potential. Union environment minister Bhupender Yadav recently said that the circular economy in India had the potential to create USD 2 trillion market and provide almost 10 million job opportunities by 2050. India has a starting point to scale the systems of circular since it already has over 3,500 recycling units with the capacity to process approximately 45 million metric tonnes of waste per year (WEF 2025). The smart city investments can achieve a higher bang-for-the-buck by integrating circular styles and waste recycling, reuse, renewable energy, sustainable construction, and preventing future liabilities.
Import Dependence & New Jobs Investment Magnetism
Circular smart cities are not merely cost-efficient: they are beacons to attract new types of investments, and potent tools to decrease reliance on imported raw materials and generate green employment. To begin with, cities that are integrating sustainability and circularity appeal to impact investors, green bonds, international infrastructure finance, and technology investments. Countries that have effective circular economy policies are regarded to be less risky when investing capital in the long term. The sensitive nature of India reliance on imports of strategic materials is already coming under scrutiny. As an illustration, India imported more than 53,700 metric tonnes of rare earth magnets in FY 2024-25, where more than 90 percent were imported by China (WEF, 2025).
The government is taking notice: recently a Rs 1,500-crore incentive scheme was approved to build domestic capacity in rare earth processing, mineral exploration, and recycling. By processing more raw materials domestically, India can capture more value, create downstream industries (EVs, renewables, electronics), avoid price shocks, and enhance strategic autonomy. On jobs: circular economy sectors—waste management, repair, reuse, renewable design, circular construction—are labour intensive and localized.
A study of Amsterdam shows “circular jobs” already make up ~11% of employment in the metropolitan area, above the national average. In India, it is projected that nearly 10 million jobs can be created by 2050 under full realization of circular economy opportunities. These are opportunities not just for skilled urban elites but also for informal and semi-skilled workers—waste pickers, recyclers, small construction firms, technicians.
Towards Human Development: Raising Health, Equality, & Well-Being
Human development is the greater goal, although economic efficiencies and green growth are important. Smart cities based on circular economy have the potential to provide in the three dimensions of health, equity, and opportunity. Circuitry systems minimize pollution, enhance waste management, lower green house gases and eliminate urban heat islands. There will be no air pollution and water pollution, which will ease the burden on healthcare systems: the less plastic burns, the less respiratory diseases are diagnosed; the more wastewater can be utilized to avoid waterborne diseases.
This comes at a large financial cost; the total health spending in India in 2022 fiscal year was Rs. 9,04,461 crore, and a big part of this was spent on curing diseases such as respiratory and waterborne diseases, which can be addressed by a circular economy (NHFS, 2024). Such payoffs are particularly valuable to India where air pollution already plays an immense role in huge costs to health, and water stress endangers daily living.To put this in perspective, the global cost of health damages from air pollution alone is estimated at $8.1 trillion. A circular model, which could yield India annual benefits of $624 billion by 2040, would directly reduce these health costs and lessen the investment pressure on building new healthcare infrastructure (PIB, 2025).
Circular economy policies have been based on the systems that are decentralised/localised, comprising of local recycling, local housing, local composting etc. These systems are all feasible to be driven by low-income communities and degree workers in the informal sector, introducing them to the formal labour market, and redistributing the benefits more generously throughout the society.
The ten million jobs projected in 2050 are voluminous and can be organized so that many of them can be moved upwards if training, decent wages, market access etc. be withdrawn with them. To enjoy the new green industries, the workers should be trained on circular design, recycling technologies, renewable energy maintenance, and so forth. The smart cities can establish green vocational institutions; they can stimulate upskilling and organize policy in such a way that increasing the number of the circular industry can benefit many people rather than making a few wealthier.
Finally, the smart cities will be evaluated through the balance which is very much interwoven in enhancing the quality of life of its inhabitants, and not based on the number of mobile applications and sensor gadgets applied. In the case of India, implementing a concoction of tenets of a circular economy into the Smart Cities Mission and infrastructure pipeline does not qualify as a decision, as such, it is an essential part of post-long-term economic growth and human development.
All smart cities planning needs to be equipped with circular economy measures such as the reuse of materials, purchase strategy, self-sufficiency in their energy sources and recycling of waste. Investments should be given preference in the budget on high circular return irrespective of increased initial costs as the savings and health, employment as well as equity dividends is much greater. India and its states not only get a chance to not only create smart cities worth the desirable 2 trillion and 10 million jobs, but also, a lot less pollution and a loving, civil society that is socially inclined. It is the growth that equates to development.
Naman Mishra is Doctoral Researcher, School of Management, Bennett University, and Dr. Swati Agrawal is Professor, School of Management, Bennett University.
Views are personal and do not reflect the opinions of the organization.
