Credit: Mark Stebnicki (via Pexels)

10 February 2025

As the industry races toward carbon neutrality and decarbonisation deadlines loom, the urgency for both incremental and disruptive innovation has never been more pressing. India, a historically significant player in the global textile supply chain, has the opportunity to emerge as a central force in advancing decarbonisation practices. With its position as one of the fastest-growing markets for fashion sourcing and consumption, the country stands poised to lead industry-wide transformation.

Why is India set to Leadership in textile decarbonisation?

India’s textile industry is one of the oldest and most extensive in the world, playing a critical role in the global garment supply chain. With a 4% share of the global trade in textiles and apparel¹ and exports exceeding $44 billion in 2022, India significantly contributes to key global fashion markets. Additionally, India is poised to become the world’s third-largest consumer market by 2027, with potential in both non-luxury and luxury segments due to a cocktail of demographic factors like the biggest global middle-class populations, the fastest growing population of ultra-high-net-worth individuals (UHNWI) globally and an increasingly trend-focused, young population². 

As the retail market in India grows, it creates an additional need for local manufacturing: predictions show that as fashion brands diversify their sourcing regions, they look to Asia growth markets for manufacturing (according to Mckinsey State of Fashion 2025, India is the top-ranked sourcing hotspot for American brands in the next 5 years). 

However, it’s not just international fashion brands who are looking at India as a key expansion destination in the future, many international manufacturers are also setting up shop in the country. This has been evidenced in the past by the likes of textile and apparel manufacturing giants like MAS Holdings, Brandix, Nanliu, and Hyosung.  The textiles sector is set for significant expansion, with a projected valuation of 350B USD by 2030, according to the Ministry of Textiles, which stated that over INR 90,000 crore of investment is expected to flow through the PM Mega Integrated Textile Region and Apparel (PM MITRA) Park and Production Linked Incentive (PLI) Scheme in the next 3-5 years³. 

However, as the industry grows, so does the responsibility to adopt innovative practices that align with global decarbonisation efforts. But how is India reconciling its burgeoning textile industry with the global push for sustainability? And why is it set to become a new global influence in the swift adoption of innovative solutions for circularity? 

India is uniquely positioned to lead this transformation due to several key aspects that define its current economic landscape:

• A fully integrated value chain: India’s textile industry encompasses all stages of production, from fibre to finished garments. This vertical integration allows for greater control and implementation of regenerative practices throughout the supply chain.
• Thriving innovation ecosystem: India’s dynamic innovation ecosystem, particularly within the textile sector, is fostering the development and implementation of sustainable technologies. 
• Skilled labour force: with the textile industry being the second largest employer in the country, India boasts a vast and skilled labour force in the textile sector, providing a readily available talent pool to adopt sustainable production methods. 
• Government incentives: the Indian government is actively encouraging local manufacturing through various initiatives and incentives. For instance, under the Production-Linked Incentive (PLI) Scheme, ₹10,683 crore ($1.3 billion) has been allocated to the textile sector to promote the production of man-made fibres and technical textiles.
• Foreign direct investment (FDI) is bringing in capital, cutting-edge technologies, and best practices.

“Shahi’s commitment to sustainability and effective government policies have enabled us to operate on 65% renewable electricity. Suppliers have to invest directly in industry decarbonisation as a majority of emissions are in the manufacturing process. Collaboration with brands and other stakeholders can reduce the risk of transitioning away from fossil fuel reliance for suppliers and unlock innovative solutions for a sustainable future.” said Anant Ahuja, Director of ESG & Sustainability Innovation at Shahi Exports.

“India Inc. is embracing AI and blockchain technologies to enhance supply chain efficiency and transparency. Notably, 70% of Indian companies have initiated AI projects, surpassing the global average of 49%. Additionally, AI-driven supply chain optimizations have led to cost reductions of up to 25% and inventory reductions of up to 35%” said Ridhima Vashisht, Manager and sector specialist at Invest India. 

The path to change: India’s Strategic Role in Circular Fashion, Water Use, Agricultural Waste and Energy 

India is poised to establish itself as a global frontrunner in material circularity given the sheer volume of textile waste that the country is generating: with an estimated 7,793 kilotons of textile waste annually — approximately 8.5% of global textile waste — only 50% of this is currently reused, repaired, or subjected to high-grade recycling⁴. 

The unorganised nature of the sector, coupled with limited material traceability and a lack of advanced recycling technologies, hampers India’s ability to fully harness this resource: this leaves a significant portion untapped, presenting a challenge and opportunity. To close the loop on textile waste, India is exploring innovations at scale within:

• Automated sorting technologies like Matoha and Picvisia and waste management and traceability platforms like Reverse Resources which can lead to more effective textile waste management. 
• Higher-grade recycling technologies like chemical or enzymatic recycling for valorisation of textile waste to its full potential, and create higher quality output. 
• Resale and Repair solutions to increase the lifespan of garments. 

India is also well-positioned to lead the way in water use and pollution. India heavily relies on water-intensive processes like dyeing and fabric finishing, worsening the country’s acute water scarcity. This issue is compounded by severe water pollution, with over 70% of rural water failing to meet WHO standards and untreated industrial wastewater polluting urban supplies. The Global Commission on the Economics of Water reports only 20% of wastewater is treated, and demand for freshwater is expected to exceed supply by 40% by 2030. The textile sector contributes up to 20% of industrial wastewater globally.

Solutions to reduce water, energy, and chemical use in textile processing include both incremental and disruptive innovations. Dry processing systems, which use minimal water and energy, show great promise in reducing water consumption and pollution. Technologies such as digital spray dyeing, supercritical CO2 dyeing, ozone pretreatment, and natural or recycled dyes are already transforming the industry. Fashion for Good’s Textile Processing Guide offers a comprehensive overview of these solutions, paving the way for a more circular future.

“Addressing water consumption and decarbonisation is critical for industry transformation. Through strategic partnerships with disruptive technologies like Deven Supercriticals, we feel empowered to lead the way for change.” Arvind Limited

Agricultural waste offers India another powerful avenue to lead the way in decarbonisation, leveraging its abundant resources and innovative potential.

According to the Indian Council of Agricultural Research (ICAR), India generates around 350 million tonnes of agriwaste every year, including crop residues, livestock waste, and agro-industrial by-products. While this waste holds significant potential for the bioeconomy, much of it is burned in regions like Punjab and Haryana, particularly during October and November. Stubble burning, a common practice to clear fields for the next planting season, contributes heavily to air pollution. The challenge of handling wet, bulky biomass forces economically marginalised communities to burn 92 million tonnes of agricultural waste annually, worsening northern India’s air quality.

Currently, innovations in the textile industry utilising agricultural residue as an alternative feedstock for producing textile fibres are being explored. Several existing technological innovations have already demonstrated early promise in producing usable textile fibres from sustainably sourced agro-residues from agricultural products like bananas, citrus, mushrooms, pineapple, etc 

However, the most crucial potential uses of agro-residues are broadly classified by the “Five F’s” – fodder, fertiliser, fibre, feedstock and fuel. the most common utilisation of agricultural waste in the textile industry is in the form of waste biomass for steam and thermal oil boilers, providing another key opportunity for India’s energy transition. 

In general, the term “biomass” refers to energy sourced from various feedstocks like energy crops, waste biomass and forestry products. According to the Apparel Impact Institute’s report Low-Carbon Thermal Energy Technologies for The Textile Industry, agricultural residues are likely the most sustainable source of biomass. Boilers and thermic fluid heaters are used to provide steam and heat required for different processes in the textile industry. These systems are often energy-intensive and heavily reliant on fossil fuels, making them key targets for reducing emissions. Although biomass is considered a transitional solution, the Apparel Impact Institute highlights India in this area due to the availability of agricultural residue and the potential for reduced greenhouse gas emissions. India’s advancements in renewable energy and disruptive technologies position it to harness agricultural waste for energy, driving significant progress in decarbonising the textile industry.

The industry should focus on two key goals moving forward: 

• Reducing the need for steam and heat by investing in more efficient machinery and disruptive technologies, and 
• Increasing the share of renewable energy in their energy mix through on-site renewable energy and renewable power grids. 

These goals and measures need to be underpinned by programmes that foster technical upskilling and assistance, financial sustainability, and collective action.

​What does adopting decarbonisation measures mean for the financial competitiveness of the Indian textile industry? 

While outlining decarbonisation solutions, it is crucial to account for the associated costs. In India, approximately US$6.5 billion in financing is required to achieve the textile industry’s 2030 target of a 50% emissions reduction⁵. This includes costs for energy audits and capital expenditures for energy efficiency and renewable energy interventions. According to McKinsey, India’s shift from thermal power to renewable energy is expected to reduce the average cost of power from INR 6.15 per kilowatt-hour (kWh) in FY 2020 to INR 5.25–5.40 per kWh by 2050, depending on the scenario.

Sustainable farming practices also offer potential economic benefits, with farmers earning an additional INR 3,400 per hectare annually under the current scenario, increasing to INR 4,800 per hectare under an accelerated scenario. Moreover, India could save up to US$1.7 trillion in foreign exchange by reducing energy imports by 2070⁶. Within the textile industry, decarbonisation often requires significant upfront investments and short-term losses for manufacturers, but the long-term savings and environmental benefits make it a crucial step for industry change.

¹ Invest India. Textiles and apparel. Available here.
² McKinsey & Company. State of fashion. Available here.
³ Invest India. India’s textiles sector to grow to $350 billion by 2030. Available here.
⁴ Fashion for Good. (n.d.). Sorting for circularity India: Wealth in waste. Available here.
⁵ Apparel Impact Institute. (2024). India: Landscape and opportunities. Available here.
⁶McKinsey & Company. Decarbonising India: Charting a pathway for sustainable growth. Available here.