The annual export turnover of Indian recycled textile industry to the EU is worth $1.7 billion. While the scale is large, these clusters, mostly run by small industries, face significant challenges such as outdated production technology, high water and energy usage (especially in areas with surface water constraints and depleting ground water resources) and non-compliance of occupational safety.

These units run on grid electricity and has a significant carbon footprint (1.4 MTPA in Panipat). Additionally, workers mostly underprivileged women and migrants are employed with low-wages. With the current situation, effective implementation of ESPR in this sector can be a challenge in ethical terms. Informal or unregistered recyclers cannot generate DPP traceability data. 

Dilemma of a developing nation

India is already taking some initiatives to improve circular economy in its textile sector. The Resource Efficiency and Circular Economy Initiative in India (RECEIC) was launched during India’s G20 Presidency in 2023.

The main objective of the initiative includes implementation of eco-design principles and circular product development, implementation of circular economy in cluster level markets within India, technology transfer from larger corporates to small manufacturers and sharing of cross-sectoral knowledge.

To further add value and knowledge development for DPP / ESPR compliance, the government of Germany funded the EU-India Resource Efficiency and Circular Economy Initiative (EU-I-RECEI) to work with Indian Industries.

However, at present, RECEIC has only 59 member organisations across its value chain. The programme was launched in 2025 with a funding of nearly €9.5 million (roughly Rs 101.7 crore). Initiatives like these are a good step towards circularity, achieving targets for nationally determined contributions and acquiring environmental, social and governance credentials.