Circular Economy 2.0: A Study on the Financial Viability of the "Product-as-a-Service" (PaaS) Model in Emerging Markets, with Special Reference to India

Abstract

The shift from traditional linear economic systems to circular economic frameworks has created a need for new business models that combine economic sustainability with resource efficiency. Circular Economy 2.0 has emerged, supported by digital technologies and service platforms. This has led to increased adoption of Product-as-a-Service (PaaS) models. In these models, the provider retains ownership of the product while users access it through service-based agreements. This study examines the financial viability of the PaaS model in emerging markets, with a focus on India. The primary goal of this study is to investigate whether PaaS can be a financially sustainable business model that supports circular economy principles. A descriptive and analytical research design is used, utilizing secondary data from industry reports, policy documents, corporate publications, and academic literature, covering the period from 2022 to 2025. This period has seen rapid growth in digital platforms and service-based economic models in India. The study focuses on two sectoral applications: E-mobility through Battery-as-a-Service (BaaS) and Agricultural Machinery Services, including tractors and agricultural drones. These sectors were chosen for their high capital costs and rising demand for shared or service-based asset use. The findings suggest that PaaS models can enhance asset management, lower entry costs for users, and provide service providers with a steady income over time. However, financial sustainability remains affected by high initial capital investment, operational costs, and infrastructure requirements. The study concludes that with effective policy measures, digital infrastructure, and capital systems, sector-specific PaaS models can become a viable path for implementing Circular Economy 2.0 in emerging markets like India.