India generates 70.73 lakh tonnes of textile waste annually, much of which lacks productive reuse and is treated mainly as an environmental problem, says a Ministry of Textiles report.
At MSME Sparks 2026, a five-day YourStory event spotlighting India's MSME ecosystem, Devansh Peshin, Regional Program Manager at Enviu, argued the issue is also a business opportunity and outlined barriers to scaling circular solutions.
Enviu, headquartered in the Netherlands, runs programs across Europe, South and Southeast Asia, and East Africa. At the event, Peshin reviewed four years of fieldwork and the policy changes still needed.
Identifying the gaps
Peshin says textile waste is a92 million ton problem globally. At the same time, lower-quality garments, blended fabrics, and fast-changing fashion trends have made recycling more difficult. Much of the waste still ends up in landfills or is incinerated.
Enviu's approach has focused on identifying gaps across the textile waste value chain before creating businesses to address them. The organization has worked with seven MSMEs involved in textile waste management across 14 cities; it has also partnered with textile clusters, including Tiruppur, Karur, and Panipat, to understand local collection, sorting, and recycling systems.
Peshin said these efforts have helped divert 4.4 million kg of textile waste while creating 2,900 green jobs, many of them for waste workers, of which around 95% are women. For example, Krishna, a third-generation waste picker in Bengaluru, moved from informal picking to running a business with higher earnings after working with Enviu.
Where mechanical recycling stops
The work has also exposed gaps that existing recycling systems cannot address.
India's recycling ecosystem largely handles cotton through mechanical recycling, but mixed fabrics containing polyester and elastane remain difficult to process. Institutional waste generated by hotels, hospitals, and spas has also remained largely outside formal collection systems.
These gaps led Enviu to support new ventures focused on polyester recycling, institutional textile waste management, and textile reuse. ”If you stop thinking of textile waste as waste, but rather think of it as an asset that sits in your closet, could you build a reuse movement and a shared economy from it?” Peshin asked.
The economics still don't add up
Peshin argued that scaling circular businesses will depend as much on economics as technology. He stated that only 39% of textile waste currently generates positive value for waste management enterprises. Just 2% enters recycling pathways, while 55% to 70% ends up in landfills or incinerators.
A Ministry of Textiles report cited during the session projects that the textile-recycling market will grow to $3.5 billion by 2031, creating one lakh new green jobs if the share of post-consumer waste converted to value rises from 39% to 55%.
Peshin said getting there means fixing the collection and sorting layer first: more textile recovery facilities, streamlined collection, and greater value addition at the sorting stage. He urged waste-management firms to move beyond collection into processing and material recovery to create higher-value products.
He projected that the next wave of circular businesses will be in material innovation, technical textiles, and recovery infrastructure, where players are few.
Policy and collaboration will determine scale
Peshin stressed that while technology is important, building a circular textile economy also requires viable business models, supportive policy, and funding.
He called for tax reforms that put recycled products on an equal footing with virgin materials. "If recycled products carry the same taxation slab as virgin products, which have had 50 years of efficiency built into their ecosystem, that is a pain point for recycled inputs," he said.
Sorting and repair can't be fully automated, he said, urging government support directed at this labour-intensive work specifically, along with an Extended Producer Responsibility framework that rewards durability, recyclability and reuse-friendly design rather than one that only penalizes waste after it's created.
Greater opportunities in collaboration and funding
For MSMEs, collaboration depends on understanding where a business fits within the value chain. "Figure out which part of the value chain you want to intervene in," Peshin said. There will “always be collaborations around that” as funding for sustainability-focused textile ventures has become more accessible.
"There is no shortage of capital now," he said, pointing to incubators and investors increasingly backing circular businesses with commercially viable solutions.
He also cautioned against importing waste: Panipat recycles imports from the EU, US, Korea, and Japan, but only one Indian port is legally cleared and exports often lack traceability. He said India doesn't need imports; domestic pre- and post-consumer waste is sufficient to build solutions.
Peshin said circularity should be both: a flow of goods and of information, giving waste workers and recyclers channels to inform brands about recyclability. For India, the opportunity includes livelihoods, reduced dependence on virgin materials, and new MSMEs focused on resource recovery.
For now, that opportunity sits in specific interventions, such as polyester recycling, institutional waste, and reuse models, rather than textile waste as a whole. Whether it widens further depends on tax policy, EPR design, and if the model working in 14 cities today can reach the 100-plus still untouched.
Edited by Teja Lele
Original Article
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