The textile and apparel sector in Tamil Nadu has emerged as a leader in sustainable practices within India, contributing over 50% of the State’s installed renewable energy capacity. With nearly 300 textile processing units in Tiruppur connected to zero liquid discharge effluent treatment plants, the sector is making significant strides. Likewise, in Panipat, open-end spinners exclusively use recycled fiber.
Additionally, India recycles nearly 90% of its used PET bottles into fiber. These sustainable initiatives have become essential as global brands demand sustainable production and supply chains in line with the European Union’s (EU) environmental, social, and governance (ESG) goals and the European Green Deal, scheduled to take effect in 2026.
India’s textile sector, particularly small businesses like the Micro, Small, and Medium Enterprises (MSMEs), fears the repercussions of new regulations like the EU’s Carbon Border Adjustment Mechanism (CBAM) and ESG standards. However, industry experts believe that this could be an opportune time for the sector to transform its sourcing, production, pricing, and supply processes and solidify its position as a leading global supplier.
Tamanna Chaturvedi, Deputy Secretary General of the Apparel Export Promotion Council (AEPC), emphasizes the importance of sustainability in meeting the demands of overseas buyers and warns that it is a “do or die situation” for India’s textile and apparel sector. Exporters must invest in sustainability to leverage the benefits of India’s potential free-trade agreement with the EU.
Despite the challenges, the Ministry of Textiles has formed an ESG task force to support the industry. The Cotton Textiles Export Promotion Council (Texprocil) is promoting the Indian cotton brand Kasturi, which offers traceability. Financial institutions are also reaching out to MSMEs to fund green and sustainable projects.
However, obstacles remain in meeting various compliance mandates, especially for MSMEs, which make up almost 90% of garment exporters. These compliances and the required documentation come with additional costs, impacting the sector’s margins. Furthermore, individual European countries are developing their codes, adding complexity to the compliance process.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), highlights the challenge of supply chain sustainability norms, with big companies possibly shifting away from manufacturing products made by smaller ones. SK Sundararaman, Chairman of the Southern India Mills Association, points out that labor issues and “living wages” vary in each textile and garment-producing state, resulting in differing labor costs.
Overseas buyers support suppliers in meeting mandates, but the compliance requirements significantly increase product prices. While some global brands are willing to pay higher prices for sustainable products, not all are supportive. The Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) is advocating for exemptions for MSMEs from ESG norms in the proposed Free Trade Agreement (FTA) with the EU, highlighting the EU’s exemption of its MSMEs.
To signal India’s commitment to ESG norms, the Tiruppur Exporters Association seeks incentives for sustainability efforts and separate Harmonised System codes for the export of sustainable products. There is also a need to raise awareness among domestic consumers about the increasing use of recycled materials across the production process. Manufacturers suggest that domestic retailers should be mandated to sell a percentage of sustainable products.
Exporters anticipate a reduction in fashion seasons due to the focus on circularity and reuse. While there are concerns about the potential linkage of ESG norms to trade negotiations, industry experts believe that norms are crucial for increasing the life cycle of products and raw materials.
With sustainability at the forefront, India’s textile and clothing sector must adapt to meet global demands, ensuring compliance, and positioning itself as a top global supplier.
