According to a report by the Ministry of Textiles of India, the country produces 70.73 million tons of textile waste annually, most of which is not used productively and is primarily viewed as an environmental problem.
Opportunities and barriers in the circular economy
At the MSME Sparks 2026 event, dedicated to the Indian MSME ecosystem, Devansh Peshin, Regional Program Manager at Enviu, stated that this problem also presents a business opportunity. He also outlined the obstacles to scaling up circular solutions.
Enviu, headquartered in the Netherlands, implements programs in Europe, South and Southeast Asia, and East Africa. At the event, Peshin presented the results of four years of field research and listed necessary policy changes.
Scale of the problem and Enviu's experience
Peshin noted that globally, the textile waste problem amounts to 92 million tons. However, the use of recycled products is complicated by low clothing quality, mixed fabrics, and rapidly changing fashion trends. A significant portion of this waste is sent to landfills or incinerated.
Enviu's approach involved identifying gaps in the textile waste value chain to launch businesses to address them. The organization collaborated with seven MSMEs managing textile waste in 14 cities, as well as textile clusters such as Tirupur, Karur, and Panipat, to study local collection, sorting, and recycling systems.
Thanks to these efforts, 4.4 million kilograms of textile waste were diverted, while simultaneously creating 2900 green jobs, most of which are women. For instance, Krishna, a third-generation waste collector in Bengaluru, was able to transition from informal collection to running his own higher-income business after working with Enviu.
Limitations of mechanical recycling
The work also revealed shortcomings that existing recycling systems cannot solve. The Indian recycling system mainly deals with cotton through mechanical recycling, but mixed fabrics containing polyester and elastane remain difficult to process. Furthermore, institutional waste generated in hotels, hospitals, and spas was largely outside formal collection systems.
These gaps prompted Enviu to support new ventures focused on polyester recycling, institutional textile waste management, and textile reuse. Peshin asked: 'If we stop viewing textile waste as trash and start thinking of it as an asset lying in your closet, can we build a reuse movement and a circular economy based on it?'
Economic aspects and market forecasts
Peshin argued that successful scaling of circular business will depend not only on technology but also on economics. He reported that currently, only 39% of textile waste generates positive value for waste management enterprises. Moreover, only 2% enters recycling pathways, while 55%–70% ends up in landfills or incinerators.
According to the Ministry of Textiles report presented during the session, the textile recycling market is expected to grow to $3.5 billion by 2031, which could create one hundred thousand new green jobs if the share of post-consumer waste converted into value increases from 39% to 55%.
Peshin emphasized that achieving this goal requires first improving the level of collection and sorting: increasing the number of textile recovery facilities, optimizing collection, and increasing added value at the sorting stage. He called on waste management firms to move beyond simple collection and engage in material recycling and recovery to create higher value-added products.
He predicted that the next wave of circular business would be linked to innovations in materials, technical textiles, and recovery infrastructure, where the number of participants is currently small.
Role of policy and collaboration
Peshin stressed that while technology is important, building a circular textile economy also requires viable business models, supportive policies, and financing. He advocated for tax reforms that ensure equal conditions for recycled products compared to virgin raw materials. He noted that if recycled products are taxed the same as primary products, which have fifty years of efficiency experience in their ecosystem, it creates a problem for recycled components.
He added that sorting and repair cannot be fully automated, and called for government support specifically for this labor-intensive work, as well as the implementation of an Extended Producer Responsibility (EPR) system that should encourage durability, recyclability, and reuse-friendly design, instead of only penalizing waste after its creation.
Opportunities in partnership and financing
Regarding MSMEs, Peshin advised that collaboration depends on understanding the business's place in the value chain. He noted that 'there will always be opportunities for collaboration' in this area, as financing for sustainable textile enterprises has become more accessible.
He stated that there is currently 'no shortage of capital,' pointing out that incubators and investors are increasingly supporting circular enterprises with commercially viable solutions. However, he cautioned against waste imports: Panipat recycles imports from the EU, USA, Korea, and Japan, but only one Indian port has legal permission, and exports often lack traceability. Peshin believes India does not need imports; domestic pre- and post-consumer waste is sufficient to create solutions.
Peshin concluded that circularity must be both a flow of goods and information, providing waste collectors and recyclers with channels to inform brands about recyclability. For India, this opportunity includes securing livelihoods, reducing dependence on virgin materials, and the emergence of new MSMEs specializing in resource recovery. Currently, this opportunity is being realized through specific interventions, such as polyester recycling, institutional waste, and reuse models, rather than regarding textile waste as a whole. Whether it will expand further depends on tax policy, EPR design, and whether the model working in 14 cities today can cover over one hundred untouched cities.
