From waste to wealth: the influence of circular economy on the operational dynamics of Indian automotive firms

Purpose This paper explores the influence of circular economy (CE) principles on the operational dynamics (using revenue and inventory as a proxy) of an automotive firm in India. To assess the extent of CE practices within the automotive sector, this study employs scrap sales (SSs) as a proxy indicator for the firm’s engagement with CE principles. Design/methodology/approach This paper uses panel data regression in our research. The study has considered 31 active automobile firms in India for this, using data gathered during a 12-year period from 2012 to 2023 with 372 observations used in this investigation. Information was obtained from Bloomberg as well as each company’s annual report. Findings The study demonstrates that SSs significantly and favorably affect inventories and revenue. This suggests that SSs positively and significantly impact the functioning of automobile companies in India. Practical implications The practical application of the study’s findings has the potential to reduce landfill usage significantly. The results underscore India’s need to implement stringent regulations for sustainable production, effective waste management strategies and transparent reporting of environmentally conscious practices. Originality/value This study contributes to promoting a CE in the country and offers a novel perspective on responsible waste management. The evidence of the SS and production function in samples of the automotive sector has been minimal. This study fills that gap and evaluates this relationship in the automobile sector. Moreover, the study does not observe any paper on the CE and its impact on inventory and revenue.