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In the global fashion industry of 2026, size alone no longer confers supremacy. For decades, the sector’s hierarchy was neatly explained through a familiar construct: a market capitalisation pyramid that crowned luxury conglomerates at the top, mass retailers in the middle, and emerging labels at the base. That model is now fracturing.
What has replaced it is a more complex, unforgiving calculus, one where economic performance is inseparable from ecological accountability and technological intelligence. Industry insiders increasingly refer to this shift as the rise of ‘Econogy’, a framework where sustainability, data transparency and AI-enabled speed determine who is genuinely future-fit. The question dominating boardrooms today is no longer ‘Who is the biggest?’ but ‘Who can still compete five years from now?’
The transparency reckoning
No single regulation better captures this transformation than the European Union’s Digital Product Passport (DPP), which has emerged as the defining compliance milestone of the decade. By mandating a digital identity for every product detailing raw material origin, manufacturing processes, carbon footprint, and even repair instructions, the DPP has weaponised transparency.
For the world’s most valuable luxury houses, this has created a paradox. Brands such as LVMH and Hermès, perched securely in Tier I with extraordinary pricing power, now find themselves navigating what analysts describe as a transparency trap. Their global, multi-tiered supply chains built over decades for scale, secrecy and control are vastly more complex to map than those of younger, tech-native competitors.
Ironically, it is H&M, sitting much lower in the valuation hierarchy that currently leads global fashion transparency rankings. Years of investment in supplier digitisation and public disclosure have positioned the fast-fashion giant as a compliance frontrunner. By contrast, several luxury groups are still struggling to achieve full upstream traceability.
Market watchers warn that this imbalance may soon carry financial consequences. From 2027 onward, analysts expect the emergence of a ‘sustainability discount’, where luxury stocks that fail to demonstrate near-total traceability trade at lower valuation multiples regardless of brand desirability.
From ownership to afterlife
At the same time, fashion’s traditional linear model of produce, sell, discard is losing economic relevance. The resale and circular economy, once dismissed as peripheral, is now scaling into a core revenue and brand-equity driver. By 2032, the global circular fashion market is projected to approach $16 billion, expanding at nearly three times the pace of the new-apparel market.
This shift has introduced a new metric of brand power: Resale Value Retention (RVR). Unlike traditional measures such as gross margin or same-store sales growth, RVR captures how well a product holds or increases its value after the first sale. In 2026, it has become a proxy for desirability, durability and brand trust.
Table 1: The 2026 circularity & resale index
|
Brand |
Market cap tier |
RVR (Resale Value) |
Circular strategy (2026) |
|
Hermès |
Tier 1 (>$200B) |
105% – 130% |
Ultra-scarcity: Vertical tannery control and strict "quota bag" distribution. |
|
Nike |
Tier 2 ($100B–$200B)* |
45% – 60% |
Nike Refurbished: Scaling to 700k+ pairs processed annually via "Move to Zero." |
|
Lululemon |
Tier 3 ($30B–$100B)* |
65% – 75% |
Like New: Official trade-in platform integrated with "Science of Feel" innovation. |
|
Zara (Inditex) |
Tier 2 ($100B–$200B) |
15% – 25% |
AI-Driven: Global integration of pre-owned platforms with automated repair logistics. |
The data underscores how differently brands are approaching circularity. Hermès remains an outlier, with resale values often exceeding original retail prices, driven by engineered scarcity and unparalleled control over materials such as leather. Nike and Lululemon, by contrast, are building scale-driven circular ecosystems capturing second and third revenue cycles through refurbishment and resale platforms that extend product lifespans.
Zara’s relatively lower RVR reflects the realities of fast fashion, but its strategy is no less significant. By embedding AI-powered resale directly into its global ecosystem, Inditex is testing whether speed and volume can coexist with circular ambition, an experiment that could reshape mass retail economics.
AI as competitive oxygen
If sustainability defines legitimacy in 2026, artificial intelligence defines survival. AI is no longer confined to forecasting or inventory optimisation; it has become the operating system of modern fashion.
Inditex’s Zara exemplifies this transformation. Through end-to-end AI integration from trend detection to demand sensing the brand has reduced its runway-to-rack cycle to just 14 days. This speed to culture allows Zara to monetise trends almost in real time, a feat Tier 6 brands, still working on six-month production calendars, simply cannot match.
Luxury, too, is embracing AI, albeit differently. Louis Vuitton’s experiments with ‘generative clienteling’ use AI to personalise product recommendations, communications and in-store experiences for individual clients. The objective is not speed, but precision: maintaining exclusivity while scaling intimacy across millions of high-value customers. The implication is clear. In the new fashion hierarchy, AI readiness is not a back-end efficiency tool it is a front-line competitive weapon.
The rise of function-led icons
Beyond luxury and fast fashion, a new cohort of brands is quietly reshaping the pyramid from below. Often categorised as performance or function-first labels, companies like On Holding and Birkenstock are emerging as the industry’s most credible climbers.
Birkenstock, currently valued at approximately $7.4 billion, sits in Tier 5 but is attracting strong bullish sentiment from analysts. Its appeal lies in an unlikely combination: deep heritage craftsmanship aligned with contemporary quiet luxury aesthetics. Coupled with aggressive expansion in Asia-Pacific where the brand is clocking nearly 30 per cent year-on-year growth Birkenstock is widely seen as a candidate to leap into Tier 3 by 2027.
Similarly, On Holding’s fusion of performance technology, design minimalism and data-driven personalisation positions it well for premiumisation, particularly in lifestyle-athleisure convergence markets.
Redrawing the pyramid
As the industry looks toward 2027, the most profound shift may occur far from runways and retail floors in supply chains. Escalating geopolitical tensions, logistics disruptions and trade policy volatility are forcing brands to rethink decades-old sourcing models.
Near-shoring and regional manufacturing hubs are gaining momentum, not just for resilience but for compliance. Shorter supply chains are easier to digitise, audit and adapt making them strategically aligned with both DPP requirements and AI-driven demand models.
Table: ‘Climber’ risk-benefit analysis for 2027
|
Future Star |
2026 Tier |
The ‘Jump’ driver |
2027 Target |
Risk factor |
|
On Holding |
Tier 5 |
AI Personalization |
Tier 3 |
Over-category reliance |
|
Uniqlo |
Tier 3 |
43% YoY Brand Growth |
Tier 2 |
Global logistics costs |
|
Snitch (India) |
Emerging |
AI Trend Velocity |
Tier 5 |
Scaling complex markets |
This data highlights the asymmetric nature of opportunity and risk. While AI and brand momentum can propel rapid ascents, execution complexity particularly across geographies remains the most common failure point. For emerging-market brands like India’s Snitch, the challenge lies not in demand generation but in scaling supply chains without diluting speed or quality.
Power is now provisional
By 2026, the fashion industry’s pyramid of power has become less a monument and more a live leaderboard. Market capitalisation still matters, but it no longer guarantees dominance. Instead, leadership is increasingly determined by transparency depth, circular velocity and algorithmic intelligence.
Brands such as Nike and Lululemon are proving that lifetime product value can rival first-sale margins. Zara is demonstrating that AI, when embedded deeply, can out-think scale. And while Tier 1 luxury houses remain formidable, their long-term security now hinges on an uncomfortable truth: in an era of radical disclosure, the luxury veil can no longer hide structural opacity. Thus the winners of 2027 will not simply be richer they will be leaner, clearer, faster, and far more accountable than anything the old pyramid ever prepared them to be.
The latest Bain & Company 2026 Global Retail Sales Outlook signals a significant cooling period for major Western markets, with growth projections for the US, UK, France, and Germany all trending downward. Despite a resilient 2025, the retail sector is entering a phase of diminished volume gains as economic pressures and softening labor markets weigh heavily on household balance sheets. Bain forecasts, US retail sales will grow by 3.5 per cent Y-o-Y in 2026, reaching $5.3 trillion - a deceleration from the 4.0 per cent growth estimated for the previous year.
Intensifying value-seeking behavior
As inflation hovers between 2.6 per cent and 3.0 per cent, a prominent ‘flight to value’ is reshaping the apparel and general merchandise landscapes. Higher-income households, which traditionally drive over 50 per cent of US retail spending, are showing marked declines in confidence according to Bain’s Consumer Health Index. Retailers are seeing shoppers gravitate toward private-label goods and discount tiers to preserve disposable income. Aaron Cheris, Global Head – Retail, Bain & Company, notes, success in 2026 will depend on sharpening customer value propositions to compete not just with peers, but with emerging AI-driven shopping platforms.
Stagnation across European markets
The European forecast is even more conservative, with the UK projected to grow by just 2 per cent, while France and Germany are expected to see gains of 1.5 per cent and 2.5 per cent respectively. Persistent cost-of-living challenges and elevated mortgage rates continue to dampen discretionary appetite, resulting in flat-to-negative volume growth in non-food categories. While potential interest rate cuts offer a glimmer of relief, Bain suggests these measures are unlikely to materially impact consumer purchasing power until at least 2027. To navigate this low-growth environment, retailers are increasingly deploying AI for margin management and operational efficiency.
Bain & Company is a global management consultancy founded in 1973 that serves over 70 per cent of the top 50 global retailers. Specializing in retail convergence, omnichannel strategy, and ESG compliance, the firm operates in 37 countries. With annual revenues exceeding $6 billion, Bain continues to drive results through data-driven performance improvement and digital transformation.
Bangladesh’s ready-made garment (RMG) industry is undergoing a fundamental structural transition as Man-Made Fiber (MMF) products emerge as the primary driver of export resilience. According to the latest data from the Export Promotion Bureau (EPB) for the first half of FY2025–26 (July–December), total RMG exports reached $19.36 billion, a 2.63 per cent contraction compared to the previous year. However, MMF-based garments significantly bucked the downward trend, recording a 14.1 per cent growth to reach $3.68 billion. This shift highlights a strategic move away from cotton-centric production toward high-value, functional apparel like polyester-rich activewear and recycled PET-based outerwear.
Fiscal incentives driving functional apparel
The government has solidified this transition through targeted fiscal measures in the FY2026 budget. To reduce input costs for technical textiles, import duties on polypropylene yarn were slashed from 10 per cent to 5 per cent, while supplementary duties on specialized fabrics were halved to 10 per cent. These adjustments are designed to improve the competitiveness of Bangladeshi sportswear and medical textiles, areas previously dominated by regional rivals. MMF garments now command higher unit prices due to stringent performance and sustainability compliance, allowing manufacturers to improve margins in a volume-saturated market.
Structural hurdles and energy volatility
Despite the MMF boom, the sector faces significant structural gaps, with 80 per cent of specialized synthetic yarns still imported from China and India. This dependence is compounded by a severe energy crisis; gas pressure in key industrial hubs has plummeted to 0–2 PSI, far below the 10–15 PSI required for continuous dyeing and spinning. These shortages, alongside a 30–40 per cent spike in production costs, threaten to stall the momentum. Industry analysts warn that securing deep backward linkages is now a mandatory requirement for Bangladesh to defend its market share as it prepares for LDC graduation in 2026 and the subsequent loss of preferential EU trade benefits.
The Bangladesh MMF segment focuses on high-performance apparel like athleisure and weather-resistant outerwear for the EU and US. Following its 1970s cotton-roots, the industry is now scaling synthetic production to reach a $100 billion export goal by 2030, supported by new 1.5 per cent – 3 per cent cash incentives and 230+ LEED-certified green factories.
India’s apparel sector is undergoing a profound structural shift as the mid-premium segment achieves a staggering 25 per cent CAGR as of early 2026. This ‘premiumization’ trend marks a departure from volume-led, price-sensitive buying toward intentional, quality-driven consumption. According to the Deloitte India 2026 Fashion Report, ‘accessible premium’—products offering superior craftsmanship and brand trust without luxury price tags—is redefining the domestic market. This transition is further fueled by the Union Budget 2026–27, which introduced the National Fiber Scheme to enhance the availability of high-grade natural and man-made fibers, ensuring manufacturers can meet the rising demand for durable, high-performance textiles.
Fiscal catalysts and infrastructure modernization
To capitalize on this $194 billion opportunity, the government has launched the Tex-Eco Initiative, a strategic framework designed to align Indian textile manufacturing with international ESG (Environmental, Social, and Governance) standards. By integrating the Textile Expansion and Employment Scheme, the budget provides capital support for machinery upgrades in traditional clusters, aiming to bridge the 30 per cent productivity gap currently seen in mid-tier manufacturing. Industry analysts suggest that these policy interventions, combined with the India-EU Free Trade Agreement, will allow Indian apparel to transition from basic commodities to high-value, design-led exports.
Domestic resilience amid global volatility
While global apparel markets face stagnation, India’s domestic consumption remains a critical stabilizer, contributing nearly 80 per cent of total industry revenue. The rise of accessible premium has pushed the Average Selling Price (ASP) in urban centers by 18 per cent Y-o-Y as consumers prioritize longevity over fast-fashion cycles. The Indian consumer is no longer chasing fashion for visibility but for meaning and confidence, stated Anand Ramanathan, Partner, Deloitte India. With the PM MITRA Mega Textile Parks now focusing on higher-margin technical textiles, the industry is well-positioned to reach its ambitious $250 billion domestic market target by 2030.
Spearheaded by organized retailers, India’s mid-premium apparel segment focuses on high-quality ethnic and Western wear. Key growth plans include expanding into Tier-II and Tier-III cities through omnichannel strategies. With a projected 25 per cent CAGR, the segment is the primary driver of the $115 billion domestic apparel market, supported by new 2026 textile-specific skilling programs.
On January 29, 2026, the United States and El Salvador formalized a landmark agreement on reciprocal trade, a move designed to insulate the Western Hemisphere’s textile ecosystem from Asian market volatility. Signed by Jamieson Greer, US Trade Representative and María Luisa Hayem, Economy Minister, Salvadore, the accord effectively builds upon the CAFTA-DR framework by eliminating reciprocal tariffs on eligible apparel and textile exports. This development is projected to reverse a 4.6 per cent contraction in Salvadoran textile revenues recorded in late 2025, with industry analysts now forecasting a growth recovery of 2 per cent to 3 per cent for FY26.
Strengthening the co-production model
The agreement specifically targets the ‘yarn-forward’ co-production model, which integrates US fiber and yarn exports with Salvadoran garment manufacturing. By streamlining regulatory authorizations and removing non-tariff barriers, the pact reduces the administrative friction that has historically hampered rapid-response logistics. Kim Glas, CEO, National Council of Textile Organizations (NCTO), noted, the agreement fortifies a critical export market for US textile workers while offering US brands a geopolitically resilient alternative to Trans-Pacific sourcing. For El Salvador, which sends 65 per cent of its textile output to the US, the deal provides the legal certainty needed to attract fresh foreign direct investment into specialized niches like performance wear and synthetic fiber blends.
Sustainability as a nearshoring catalyst
Beyond tariff relief, the pact emphasizes environmental enforcement and digital trade facilitation, aligning Salvadoran factories with the growing demand for ‘green-certified’ production. El Salvador currently operates 19 free trade zones equipped with advanced water-recycling and energy-efficient systems, positioning the nation as a leader in sustainable nearshoring. As U.S. retailers reassess their inventory strategies in light of global shipping disruptions, El Salvador’s proximity - offering lead times of under three weeks - combined with this new reciprocal status, establishes a high-tech manufacturing lab for the Americas. This strategic alignment is expected to safeguard over 60,000 direct jobs while enhancing the transparency of the regional apparel value chain.
As the pillar of El Salvador’s economy, this sector generates 30 per cent of total national exports. Historically focused on basic cotton apparel, the industry is transitioning into high-value technical textiles and athleisure for the North American market. With revenues exceeding $2.1 billion, the sector aims to regain its 2022 performance levels through enhanced automation and US trade reciprocity.
Algeria is rapidly transforming its industrial landscape, positioning itself as a strategic nearshoring destination for global fashion giants. Following a series of legislative reforms initiated in 2020, the North African nation is now seeing a surge in localized production through the ‘Made in DZ’ initiative. Minister of Foreign Trade and Export Promotion, Kamel Rezig, recently confirmed that dozens of international clothing brands have established local manufacturing bases, utilizing Algerian raw materials and labor to supply European and American markets. This shift is part of a broader national strategy to replace apparel imports with domestic output, bolstered by the 2026 Finance Act, which offers full coverage of participation fees for exporters in international business events and simplified tax procedures.
Fiscal incentives and export expansion
The Algerian government’s push is backed by substantial fiscal catalysts aimed at reducing the nation's 90 per cent dependency on hydrocarbon exports. The new investment framework provides tax exemptions for businesses involved in micro-importation and establishes a reduced 5 per cent customs duty rate for essential manufacturing inputs. By leveraging its proximity to Europe - Algeria’s primary trade partner—the textile sector is targeting a significant increase in non-hydrocarbon revenue. Major vertically integrated plants, such as the Tayal SPA complex, are already operational, boasting a production capacity of 30 million ready-to-wear items annually. These facilities bridge the gap from cotton fiber to finished garments, ensuring high-quality standards that meet international compliance for global retail.
Strategic localization and regional trade
The entry of global brands is the greatest proof that Algerian industry has made significant strides, stated Minister Rezig during the International Brands Exhibition. The initiative is not solely focused on Western markets; Algeria is increasingly eyeing the African Continental Free Trade Area (AfCFTA) to become a regional textile hub. By guaranteeing favorable investment conditions and an attractive climate, public authorities aim to foster deep backward linkages in the supply chain. This enables local manufacturers to move beyond simple assembly into high-value design and fabric engineering, effectively competing with established Mediterranean textile hubs like Turkey and Egypt.
Spearheaded by the Ministry of Foreign Trade, the Algerian textile initiative focuses on localizing international brands and expanding exports to EU and African markets. Key categories include high-fashion apparel and technical textiles. Growth plans involve reaching full production capacity at major hubs like Tayal by late 2026, aiming to diversify the economy beyond oil and gas.
Dubai Fashion Week A/W 2026/27 commenced at the Dubai Design District (d3), marking a pivotal transition for the UAE’s apparel sector. Co-founded by d3 and the Arab Fashion Council, the event opened with Italian luminary Alberta Ferretti, signifying a strategic shift toward established international prestige. As the UAE luxury goods market is projected to reach $8.98 billion in 2026, the week serves as more than a creative showcase; it is a commercial engine driving the region’s 5.7 per cent CAGR in luxury fashion.
Cross-continental synergies and market access
The return of Indian couturier Manish Malhotra as the closing designer highlights a deepening ‘East-West’ trade corridor. Malhotra’s presence underscores the commercial importance of the ‘World Collection: Dubai,’ specifically tailored for a Middle Eastern clientele that demands high-craftsmanship, regionally resonant silhouettes. Meanwhile, the inclusion of Victor Weinsanto - supported by the French Fédération de la Haute Couture et de la Mode - reinforces DFW’s official status on the global fashion calendar. These collaborations are facilitated by an expanded International Buyers Program, which now integrates major retail groups from the US, UK, and Italy to capitalize on Dubai's high-disposable-income demographic.
Digital transformation and sustainable retail
With the UAE’s online fashion market expected to hit $3.3 billion by 2032, the current edition integrates advanced retail technologies to reduce return rates and enhance personalization. The ‘Threads Talks’ by Meta and the adoption of AI-driven styling tools by regional giants illustrate a sector-wide move toward high-tech retail solutions. Furthermore, as consumers increasingly prioritize ESG (Environmental, Social, and Governance) values, the focus on "green-certified" production - represented by sustainable labels like Molato - is becoming a non-negotiable entry requirement. This dual focus on digital agility and ecological responsibility is securing Dubai’s reputation as a future-ready fashion capital.
Co-founded by Dubai Design District (d3) and the Arab Fashion Council, DFW is the region’s official fashion platform. It serves the MENA, Asian, and European luxury markets, aiming to cement Dubai as a global creative capital. Since its inception, DFW has contributed over AED 587 million to the UAE economy, focusing on high-end couture and luxury ready-to-wear.
Long the preferred near-shoring partner for the European Union, the Turkish textile industry currently faces a critical inflection point as Brussels aggressively expands its free trade network. Recent projections suggest, the impending EU-India FTA could erode Turkey’s competitive edge by eliminating tariffs on over 90 per cent of Indian goods. While Turkey currently enjoys a privileged position within the Customs Union, the lack of modernization in this 30-year-old framework is increasingly viewed as a liability. Market analysts note, India’s lower labor costs, combined with newly leveled trade barriers, threaten Turkey’s status as the EU’s second-largest textile supplier.
Strategic integration versus tariff equalization
To maintain its dominance, the Turkish apparel sector is shifting its value proposition from cost-efficiency to high-speed supply chain integration. Industry leaders emphasize, Turkey’s proximity allows for ‘ultra-fast fashion’ cycles that Asian competitors cannot match. However, Dirk Vantyghem, Director General, Euratex has signaled, the Customs Union must be updated to address contemporary market surveillance and digital trade standards. Without these reforms, Turkey risks being sidelined by the EU’s broader diversification strategy, which now includes the Mercosur bloc and revitalized ties with South Asian manufacturing hubs.
Sustainability as the new competitive frontier
The European Green Deal and the Circular Economy Action Plan are redefining the entry requirements for the EU market. Turkish manufacturers are responding by investing in water-recycling technologies and traceable organic cotton to align with the EU’s stringent sustainability mandates. This transition is not merely environmental but defensive; as the EU grants preferential access to new partners, Turkey’s ability to offer ‘green-certified’ production serves as a crucial differentiator. The sector's survival now hinges on whether it can successfully trade its traditional tariff advantages for a role as Europe’s sustainable, high-tech manufacturing lab.
Established as a post-war industrial backbone, Turkey’s textile sector remains a top-three global player in knitwear and denim. Focused on the EU and UK markets, the industry is currently transitioning toward technical textiles and high-end branding. Despite inflationary pressures, exporters target a $20 billion annual revenue benchmark through increased automation.
Gokaldas Exports has demonstrated operational resilience in Q3, FY26, reporting a consolidated total income of Rs 998 crore. While the top line remained steady Y-o-Y, the quarter represented a critical test as the company absorbed the first full impact of the 50 per cent reciprocal US tariffs imposed in late 2025. Despite this significant headwind, the firm’s domestic India operations outperformed the broader market, delivering an 8 per cent revenue growth even as national apparel exports remained largely stagnant. This domestic strength helped offset a 26 per cent decline in consolidated EBITDA, which settled at Rs 96 crore with a narrowed margin of 9.7 per cent.
Managing Africa disruptions and trade renewals
The company’s African business faced a volatile quarter characterized by supply-chain delays and persistent uncertainty surrounding the African Growth and Opportunity Act (AGOA). However, management highlighted a sequential recovery in the region, with a robust order pipeline linked to the potential renewal of AGOA trade preferences. Our productivity gains and diligent cost management have been instrumental in absorbing the US tariff rebates, noted Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director. The strategic focus is now shifting toward the newly ratified India-EU Free Trade Agreement, which provides a hedge against US market volatility and is expected to drive EU revenue share from 16 per cent to 20 per cent within the next year.
Capitalizing on budgetary support and amalgamations
To strengthen its vertical integration, Gokaldas has approved an amalgamation scheme with BRFL Textiles (BTPL), aiming to enhance fabric processing capabilities. This move aligns with the Union Budget 2026–27, which introduced customs duty cuts on critical inputs and capital support for machinery modernization. These fiscal measures are designed to reduce working-capital stress and support the industry’s transition into high-value, sustainable apparel. With a current market capitalization of approximately Rs 40.33 billion and a strong order book, Gokaldas is positioning its diversified manufacturing base across India and Kenya to capture emerging opportunities in non-US markets.
Global apparel manufacturing leadership
Gokaldas Exports is a premier Indian garment producer, operating over 30 units with an annual capacity of 87 million pieces. Serving 50+ countries, it specializes in high-fashion outerwear and activewear. The firm is currently expanding its African footprint and integrating fabric processing to achieve a $100 billion sectoral export vision.
The Union Budget 2026–27 has formally introduced the Tex-Eco Initiative, a strategic pivot designed to safeguard India’s textile exports against the European Union’s tightening environmental mandates. With the EU’s Ecodesign for Sustainable Products Regulation (ESPR) enforcing a ban on the destruction of unsold textiles starting July 2026, Indian manufacturers are facing a rigorous ‘green’ transition. The Tex-Eco program provides the necessary fiscal framework for MSMEs to adopt circular manufacturing, focusing on durability, recyclability, and the integration of Digital Product Passports. Industry leaders suggest this alignment is critical to maintaining access to a European fashion market valued at €376 billion, which now demands verified sustainability data for every imported garment.
Strengthening fiber security and cluster modernization
To support this ecological shift, the government has integrated the Tex-Eco push with the National Fiber Scheme, targeting domestic self-reliance in natural, man-made, and ‘new-age’ technical fibers. By reducing import dependence on raw materials, the initiative aims to lower the overall carbon footprint of the value chain. Furthermore, the Textile Expansion and Employment Scheme will modernize traditional clusters with capital support for zero-liquid discharge (ZLD) systems and advanced certification labs. These measures are designed to bridge the productivity gap - currently estimated at 20–40 per cent behind competitors like Vietnam—while positioning India to reach a $100 billion export target by 2030.
Strategic market advantage
Sustainability is no longer a corporate choice but a trade requirement for the EU market, noted Sanjay K. Jain, Chairperson, ICC National Textile Committee. The timing of the Tex-Eco launch coincides with the finalized India-EU Free Trade Agreement, which grants zero-duty access to Indian apparel. By leveraging this tax advantage alongside high ESG compliance, Indian exporters can effectively compete with traditional low-cost hubs. The initiative ensures that Indian-made fabrics satisfy the EU’s limit on microfiber shedding (0.5g/kg per wash), turning a potential regulatory barrier into a competitive edge for premium sustainable exports.
The Tex-Eco Initiative is a core component of India's 2026 Integrated Textile Program. It focuses on aligning domestic manufacturing with global green standards, particularly the EU's ESPR and Digital Product Passports. The initiative aims to drive 20 per cent annual export growth through cleaner production, targeting global markets like the EU, UK, and Australia.
