India has the potential to unlock nearly US$ 9.4 billion (Rs 78,500 crore) annually from textile waste by strengthening collection, sorting and recycling systems, according to a joint report by FICCI and Resource Efficiency and Circular Economy Industry Coalition.

The country generates around 7.25 million tonnes of textile waste each year, but a large portion remains underutilised due to fragmented collection networks, lack of standardised sorting and limited recycling capacity.

The report estimates that about US$ 9.4 billion in value is currently unrealised, with nearly 85% of the opportunity concentrated in reuse pathways, an area that remains largely underdeveloped.

Post-consumer waste management is a major challenge, with nearly 45% of textile waste failing to enter recovery streams and instead ending up in landfills or incineration.

Sorting has been identified as a critical bottleneck, described as the value gate of the ecosystem. More than 95% of sorting in India is still manual, with minimal technology adoption and no uniform grading standards.

The report also flags key policy and infrastructure gaps, including the absence of a dedicated Extended Producer Responsibility (EPR) framework for textiles, weak source segregation and poor traceability.

On the recycling front, India’s ecosystem is largely dependent on mechanical processes, with limited chemical recycling capacity, restricting the ability to process blended fabrics and scale circular solutions.

To unlock the sector’s full potential, the report recommends a national EPR framework, investments in collection and sorting infrastructure, standardised grading systems, better traceability, integration of the informal workforce and expansion of recycling capabilities.

It concludes that while circular materials can boost supply chain resilience and reduce reliance on virgin resources, achieving scale will require coordinated efforts across policy, industry and infrastructure.