A green reset to textile industry

NAVYA DANG AND SUDAKSHINA SINHA BANERJEE

India is the world’s sixth-largest exporter of textiles and apparel, with the sector contributing 8.21% of total exports in FY 2024. The United States and the European Union remain India’s most important markets. With a 3.9% share in global textile and apparel trade and a sustained trade surplus, textiles remain a cornerstone of India’s export economy.

However, the basis of global competitiveness is changing. The EU’s Carbon Border Adjustment Mechanism (CBAM) and increasing buyer demands from the US for labour transparency, environmental compliance, and supply-chain traceability indicate a structural shift in trade norms. Sustainability is no longer discretionary; it is becoming a market access condition.

India’s textile sector has historically been anchored in natural fibres such as cotton, silk, jute, and wool. As the largest cotton producer globally, India benefits from abundant raw material availability and strong domestic and export demand. India also produces emerging sustainable fibres, including hemp, banana fibre, bamboo viscose, linen, ramie, and indigenous silks. While these materials have growing global appeal, their contribution to industrial-scale production remains marginal. The presence of sustainable inputs has not yet translated into systemic transformation.

Worldwide, countries are aligning with global sustainability norms. Asian countries continue to dominate global textile manufacturing, with China accounting for nearly half of production. However, several Asian exporters are rapidly aligning with international governance standards.

Vietnam, now the second-largest textile and apparel exporter after China, has institutionalised sustainability through widespread adoption of certifications such as GOTS, OEKO-TEX, and WRAP, driven by buyer requirements rather than regulatory compulsion.

Concurrently, the global textile industry is transitioning from a linear production model to a circular economy, aimed at reducing waste and emissions. Recycling and upcycling initiatives – particularly in Europe – demonstrate growing industrial commitment, even as commercial viability challenges persist.

India has initiated institutional responses through the formation of an ESG Task Force for the textile sector. Efforts such as Texprocil’s promotion of Kasturi Cotton represent early attempts to build traceability and credibility in export markets.

The most significant policy intervention is the MITRA (Mega Integrated Textile Region and Apparel) Parks, developed under the government’s 5F Policy. These parks aim to integrate the textile value chain within shared, resource-efficient infrastructure and lower compliance costs for MSMEs. Seven states have been selected to host these parks, with provisions for worker housing, skill development, and formal employment.

For a sector characterised by fragmentation and limited ESG capacity, this model has the potential to standardise compliance and improve export competitiveness.

Notwithstanding its potential, the MITRA framework carries risks that require proactive mitigation. Land acquisition may result in farmer displacement and social inequities, while increased industrial activity could exacerbate local water stress. Weak governance of Common Effluent Treatment Plants (CETPs) poses environmental risks, and smaller local suppliers may face exclusion if integration mechanisms are not carefully designed.

Without strong safeguards, sustainability gains at the macro level may be offset by localised social and environmental costs.

Despite policy intent, material transformation remains limited. According to Fashion for Good, low-impact natural fibres such as hemp and jute have not yet achieved industrial scalability in India. IBEF reports that only 1% of fibres in Indian textiles come from recycled clothing.

New market sensibilities

Textiles and apparel remain among India’s most employment-intensive export sectors. As global buyers increasingly mandate ESG compliance, sustainability is no longer a regulatory exercise, but a strategic determinant of market access. Competing exporters such as Bangladesh and Vietnam have already internalised this shift.

In India, environmental considerations continue to trail financial imperatives in industrial decision-making. This imbalance must be corrected if India is to retain credibility and competitiveness in global textile trade.

India must reposition ESG as an industrial policy, not a compliance overhead. This requires enforceable standards, credible third-party verification, shared ESG infrastructure for MSMEs, and transparent data on emissions, labour, and traceability. Without measurable and enforceable sustainability frameworks, India risks losing ground in markets that increasingly reward governance over volume.

The global textile transition is underway. India’s response in this decade will determine whether it remains a price-driven supplier or emerges as a sustainability-aligned manufacturing leader.

(Navya is a socio-legal researcher; Sudakshina is an impact advisor)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.