AbstractResource depletion is a concern for the global economy; many think that available resources on the planet will not be able to cater to an ever‐growing population. Thus, economies are trying to become circular, leaving behind the linear tradition linear approach. In the circular economy (CE), physical resources and energy are made to loop back into the supply chain (SC) for a more extended period. Proper selection of suppliers is an essential criterion towards proper execution of the CE principle in SC. In this research, we have constructed a framework for evaluating the supplier concerning the CE implementation. Further, this research identifies the criterion and sub‐criterion, which are pertinent for evaluating the supplier in CE context. Fuzzy‐based ‘Criteria Importance Through Inter‐Criteria Correlation (CRITIC)’ method is justifiably applied to determine the aggregated weights of the criteria. Finally, ‘Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS)’ method is used to determine the suppliers' ranking in the Indian automobile industry. Six criteria and 24 sub‐criteria are obtained as per recent literature and then inputs from experts. ‘Environment’ criterion came out as the most favourable criterion with a subjective weight of 0.230. The current research is one of the first such attempts to provide criteria for supplier selection in a CE environment. The developed framework would help organisations in implementing CE‐based supplier selection. The identified criteria and sub‐criteria would provide organisations with means to evaluate suppliers and help suppliers develop an effective and efficient CE based on the SC.