Tex-Eco Initiative: future-proofing Indian textile and garment exporters for global ESG compliance

India's Union Budget 2026-27, revealed earlier this week, outlines strategic shifts for the textile and garment industry to enhance its global supply chain role, focusing on value, sustainability and technology. The Tex-Eco Initiative was unveiled as one of the “Integrated Programme for Textiles"' pillars: It is designed to align Indian textile manufacturing with stringent global ESG (Environmental, Social, and Governance) standards.

Its primary goal is to ensure that “Made in India” apparel is compliant with the upcoming 2026-2030 regulations in the EU and North America, and that Indian exporters — especially MSMEs — are not locked out of any of these markets due to non-compliance. Thus, the government is essentially future-proofing India's second-largest employment sector.

FashionUnited has taken a closer look and put together the details in five key areas regarding the Tex-Eco Initiative’s sustainability requirements and operational focus:

1. Global compliance and traceability

The initiative focuses on preparing Indian exporters for the EU Strategy for Sustainable and Circular Textiles. The EU’s Ecodesign for Sustainable Products Regulation (ESPR) and the Digital Product Passport (DPP) are set to become mandatory between 2026 and 2030. While the former requires garments to be durable, recyclable and free of hazardous substances, the latter encourages the adoption of digital tracking to provide information on a garment’s origin, material composition and recyclability.

Under the initiative, the government will provide financial support for SMEs to implement blockchain-based or AI-led supply chain tracking to verify “organic” or “recycled” claims, thus countering greenwashing risks.

2. Circular economy and recycling hubs

A major requirement of the Tex-Eco Initiative is the shift away from linear production (take-make-waste) to circularity. For this, the Indian government has earmarked funding to transform traditional hubs like Panipat (the world's “cast-off capital”) and Coimbatore (the “Manchester of South India”) into high-tech textile recycling centres.

Manufacturers will also be incentivised to use pre-consumer and post-consumer textile waste. For instance, companies like Filatex India are already aligning their Ecosis platforms with Tex-Eco to produce molecularly regenerated polyester yarn.

3. Chemical and environmental safety

The Tex-Eco Initiative aims to move beyond just “green energy” to address the chemical footprint of production and mirrors the “Zero Discharge of Hazardous Chemicals” (ZDHC) framework. It provides capital for the establishment of Common Effluent Treatment Plants (CETPs) in smaller clusters.

In addition, there is a specific push for natural and bio-based dyes. A pilot project across eight major clusters is currently focused on eliminating toxins from the dyeing and finishing stages.

4. Certifications and standards

To help MSMEs access high-value “green markets,” Tex-Eco provides subsidies for obtaining international certifications, including GOTS (Global Organic Textile Standard), OEKO-TEX (Standard 100 and Made in Green) and GRS (Global Recycled Standard). The is also the India Handloom Brand, a domestic mark that signifies “Zero Defect, Zero Effect” on the environment.

5. Carbon neutrality goals

The initiative aligns with India’s broader “Panchamrit” (“five nectar”) climate goals, which were announced at COP26 in 2021. They include achieving net-zero emissions by 2070 and significantly reducing the country’s carbon footprint by 2030 through enhanced renewable energy capacity, decreased carbon intensity and reduced emissions. 

To increase energy efficiency, the initiative provides incentives for upgrading to low-liquor ratio dyeing machines and installing rooftop solar systems to reduce Scope 2 emissions.

In terms of carbon neutral manufacturing, while not yet mandatory for all, Tex-Eco provides a “green rating” for factories, which is becoming a prerequisite for suppliers working with major global retailers like H&M, Inditex and Walmart.

Overall, the Tex-Eco Initiative is noteworthy because it marks the moment India stopped treating sustainability as a luxury or “nice to have” and started realising its value as a “must have” and trade necessity.