Prove What You Produce: Why traceability is becoming the next competitive advantage for Indian MSMEs

Parvinder Kadyan
Founder-Chairman,
GATS | Founder, Aadi Sustainability Solutions

For decades, it was fairly easy to recognise an advanced textile or garment factory. A buyer looked at the machinery, production capacity, productivity, quality, FOB, sampling speed, compliance, and delivery timelines. If you could develop quickly, manufacture consistently and ship on time, you were buyer-ready.

That definition is starting to change.

Price, quality, and delivery are still non-negotiable. But sourcing teams are now looking beyond the factory gate. They want to know: Where did the material come from? How much recycled content does the product actually contain? What resources went into making it? Can the material be traced? And, importantly, can the environmental claim be backed up with evidence?

The Buyer Is Beginning To See The Factory Differently

Fashion companies are setting targets around recycled materials, emissions, water, chemicals, and circularity. The commitment may be made in Europe or America, but much of the work needed to meet those targets will happen in manufacturing economies such as India.

Someone has to recover textile waste.

Someone has to sort it by fibre and colour. Someone has to turn it into usable fibre, maintain yarn quality, manufacture the fabric, process the garment and, increasingly, provide the evidence that the resulting claim is actually true. That entire chain creates value.

Otherwise, we risk doing the difficult work of circularity while still competing primarily on FOB price. A traceable material, backed by credible information on its composition, performance, and environmental impact, is worth discussing differently with a buyer. 

For years, words such as sustainable, eco-friendly, responsible and conscious were widely used in fashion marketing. That space is tightening.

Major consumer markets are increasingly demanding that environmental claims are clear and substantiated. In the UK, consumer-law violations can attract penalties of up to 10% of worldwide turnover, while new EU rules from September 2026 further restrict vague environmental claims.

Green Claims Are Becoming Business Risk

For an MSME, the important point is not the regulation itself. It is what that regulation means for sourcing. Brands cannot confidently make claims about a product if their suppliers cannot provide the information needed to support those claims.

That changes the value of a supplier. A supplier who can provide reliable product and material information becomes easier for a brand to work with, easier to include in reporting, and potentially more valuable to the buyer.

Take One Pair Of Jeans

Traditionally, the commercial file may contain: Style → Fabric → Wash → Costing → Test Report → Delivery.

Now imagine the same product also carries: Waste source → Fibre composition → Recycled content → Yarn lot → Fabric batch → Processing → Water/Energy → Finished garment. The product hasn't changed.

But the information expected around it has.

At Aadi Sustainability Solutions, our work with circular products has shown us that manufacturing the recycled garment is often not the hardest part. The harder part is keeping the connection intact—from waste to fibre, fibre to yarn, yarn to fabric, fabric to garment, and ultimately, from the product back to the evidence behind its claims.

A product can be physically circular. But if information gets lost somewhere along that chain, a significant part of its commercial value can be lost with it. This is where traceability stops being just a sustainability requirement and starts becoming a business capability.

From Circular Product To Verified Product

The opportunity is not to add another compliance layer. It is to build better visibility into how the factory already works. 

Many MSMEs hear terms such as traceability, DPP, or LCA and immediately think of expensive software, consultants, and another technology investment. That is the wrong place to start. Traceability starts with knowing what is moving through your factory.

You Do Not Need Expensive Technology To Start

Give incoming material and waste a batch identity. Record its source, weight, and composition. Connect fibre batches to yarn lots, yarn lots to fabric, and fabric to garment orders. Start linking the electricity, water, fuel and production data you already collect to those processes and orders. 

A well-designed ERP—or even a disciplined spreadsheet to begin with—can create useful traceability without a major technology investment. Technology can automate and scale this later. It cannot fix a process that was never properly recorded in the first place.

Tomorrow's Preferred Factory Will Sell More Than Capacity

For years, factories impressed buyers by showing their latest machines, production capacity, and technical capabilities. Increasingly, buyers will also want to understand the system behind those machines. Having solar power is useful. 

Knowing what share of a product's production energy it actually supplies is better. Buying recycled cotton is useful. Knowing where it came from and exactly how much is in the product is better. Being ZLD is valuable. Knowing how much water each process and product actually uses tells the buyer—and the factory—much more. 

The difference is not just having the right infrastructure. It is being able to show what that infrastructure is doing.

The Value Is In The Data Behind The QR Code 

Digital Product Passports will eventually make more product information portable and accessible across the value chain. But manufacturers should not start with the QR code.  Start with the information that the QR code will eventually point to. If the underlying data is incomplete, inconsistent, or impossible to verify, a QR code does not solve the problem.

India's Opportunity Is To Connect What We Already Have

India already has collectors, sorters, recyclers, spinning mills, processors and garment manufacturers operating at enormous scale. The capability is here. The bigger challenge is fragmentation. Material moves from one player to another, but the information often does not move with it.

A recycler may know where the waste came from. The spinner may know the fibre composition. The fabric manufacturer knows the yarn lot. The garment manufacturer knows the order. But these pieces of information are rarely connected into one continuous chain. When material flow and information flow move together, Indian MSMEs can move beyond selling commodity recycled fibre, fabric or garments. They can start selling something more valuable: a circular product that can be verified.

For MSMEs, this transition does not necessarily require a huge technology investment. Start with the basics: Measure materials. Link batches. Organize utility data. Connect production records. Make the information you already generate usable.

Factories that measure better usually manage better. And as buyers face greater pressure to substantiate what they sell, suppliers that can show where their materials come from, how they are made, and what goes into the final product will be better positioned to win and retain business.

Business signals referenced: UK consumer-protection enforcement and European Union rules on environmental claims and product information.