Circular economies can, at best, contribute to sustainable development. Nevertheless, the realisation of positive social and environmental impacts depends partially on the dynamics of actors' inclusion in circular processes. We identify factors affecting the inclusion of farmers in agricultural residue supply chains in India and the socio‐ecological impacts thereof. We also introduce a framework for designing inclusive and just circular practices. Information, resources, co‐operation, and co‐design act as mediators to socio‐ecological impacts. The failure to consider these aspects may lead to unintended negative consequences, such as declined soil health or delays in other operations. The positive outcomes of selling the residue are linked to improved livelihood opportunities, local development and health. Selling is only a partial solution, and other straw management methods, such as incorporation, should also be applied.