India’s Textile Sector Faces ESG, CBAM Challenges In EU
India’s textile and clothing sector, a crucial component of the vast Micro, Small, and Medium Enterprise (MSME) landscape, is on the brink of a sustainable transformation. The impending enforcement of the European Union’s (EU) environmental, social, and governance (ESG) standards, including the Carbon Border Adjustment Mechanism (CBAM), scheduled for 2026, is driving this transformative phase.
Indian textile exporters are proactively reimagining their practices, embracing sustainability as more than just a compliance measure but a strategic initiative. This approach aims to solidify their position as leading global suppliers and potentially leverage benefits from an upcoming free trade agreement with the EU.
Tamil Nadu’s textile industry, a major player in the sector, has already made significant strides towards sustainability, contributing over 50% of the state’s installed renewable energy capacity. The industry showcases its commitment through initiatives like adopting common effluent treatment plants in Tiruppur, ensuring zero liquid discharge from nearly 300 textile processing units.
Despite this commitment, challenges such as compliance costs, documentation requirements, and labor cost variations across states persist. The industry is advocating for supportive measures, including the establishment of an ESG task force and financial institutions offering funding for green projects.
While adapting to new regulations, this shift signifies a collective industry drive toward a future where sustainability becomes the norm.