With the impending implementation of European Union (EU) environmental, social and governance (ESG) standards, particularly the Carbon Border Adjustment Mechanism (CBAM) 2026, the Indian textile and apparel industry is transforming to address these challenges.
In order to prepare for meeting ESG and CBAM specifications, Indian textile exporters are changing their traditional approach and no longer view sustainability as a compliance specification, but as a move to strengthen supply chains and position as a globally renowned supplier.

India and the EU are also negotiating a free trade agreement and the shift towards sustainable practices is expected to provide opportunities to harness the benefits of the free trade agreement.

Tirupur, considered India’s knitwear export hub, has taken several sustainable initiatives such as installing renewable energy. About 300 textile printing and dyeing units also discharge pollutants to ordinary sewage treatment plants with zero liquid discharge.

However, in adopting sustainable practices, the industry faces challenges such as compliance costs and documentation requirements. A few brands, but not all, are willing to pay a premium for sustainable textile products, thereby increasing costs for manufacturers.

In order to help textile companies cope with various challenges, various textile industry associations and the Indian Ministry of Textiles are working hard to provide support, including the establishment of an ESG working group. Even financial companies are getting involved to finance green projects.