The Ministry of Textiles is promoting sustainable production and consumption patterns in the Indian textile industry through initiatives like SusTex and an ESG task force. The Confederation of Indian Textile Industry (CITI), one of the leading trade bodies, and an integral part of the ESG task force, is promoting compliance with domestic and international regulations among MSMEs.

Chandrima Chatterjee, Secretary General, CITI, discusses the significance of MSMEs adhering to ESG regulations and increasing opportunities for the sector, in an exclusive interview with Sonal Desai, Editor, WriteCanvas.

Some industry facts: Invest India predicts the Indian textile and apparel market to reach $350 billion by 2030, with the domestic market accounting for $250 billion and exports at $100 billion.

The textile industry’s MSME sector, comprising 80% of its value chain, is embracing sustainability and ESG regulations due to increased demand from domestic and international players.

Remember, approximately 70% of the textile industry is in the MSME. That is why MSME’s moving to the compliance folder makes it all the more significant, as that will ensure growth for Indian textiles in coming years.

Edited excerpts:

Although the GoI and the trade bodies have launched various initiatives to enable the MSMEs in the textile segment, the uptake is slow, largely due to lack of clarity and capacities. 

Given their numerous voluntary ESG initiatives, the large Indian textile companies have the potential to establish themselves as a hub for sustainable sourcing; however, the vast majority of SMEs in the industry have not yet benefited from this awareness or capacity.

But the scenario is changing as more and more MSMEs are at least showing a keen interest in various regulations and ESG frameworks. The EU’s Green Bill and the Supply Chain Act in Germany have kicked off the conversations about ESG in the MSMEs. With deadlines for many of these regulations nearing or some of them becoming mandatory, MSMEs are realizing that it is going to be a business imperative, for all those looking at exporting. The understanding and adherence to the ESG requirements is presently a work in progress.

What is driving ESG compliance among the MSMEs in the textile sector?

The Ministry of Textile has set a target for $100 billion in textile exports over five years. India sees this as an opportunity to strengthen its textile industry, with MSMEs playing a crucial role in achieving this goal.

This is a huge opportunity for the MSME segment. Our nation is the only one with an end-to-end value chain and with a USP of servicing small lot orders and niche hand-crafted products.

The social compliances in the last decade were primarily top-down and brand-driven, making them ad-hoc and not sustained efforts towards organic changes. Also, MSMEs servicing largely domestic market did not find the business case to understand and implement these. But with the greater integration of the domestic and export segments, growing commoner awareness across the world, the digital/ e- commerce trade homogenising the markets, the gaps in expectations and requirements are also closing. Recognising the need and intent of the MSMEs to align to the global requirements, the need is for developing and aligning Indian benchmarking with ESG compliances and best practicies of the destination countries. Feasible, adoptable initiatives that make Indian MSMEs more responsive to the ESG reporting requirements need to be mapped and guidance provided to them.

It is now important to tread the ESG path, and it is more significant that we start driving the path over the next year or two.

CITI has been researching the nation’s ESG environment for the past year. Can you share some key findings?

We have identified three or four critical areas where the textile value chain as a whole can begin its ESG journey.

To begin with, we have been encouraging capacity building through the ESG series for the past few months.  We are engaging with the think tanks, manufacturers and solution providers to come together and discuss the possible solutions and challenges.

We understand that observing the peer group will help the industry identify workable strategies and inspire peers to take action. Hence we are providing platforms for peer group discussions also.

CITI is also part of the ministry’s ESG group.  We are in the process of creating a number of guidelines and frameworks to help SMEs adhere to legal requirements.

For instance, we are trying to work on guidelines and reporting frameworks that incorporate the fiber to finish value chain with a special focus on recycling. They play a critical role in all the areas from yarn to fiber to the fabric.

We are working with regenerative cotton and are also focusing on Human Right Due Diligence and Disclosure (HRDD) disclosures. They emphasize the importance of social and environmental aspects, particularly carbon capture.

In India, the textile value chain is focusing on environmental and social aspects, with governance being a key focus. Awareness of sustainable practices is increasing, with solar energy being a promising start. Capacity building is essential, and building energy audits are prioritized.

CITI constituted textile sustainability awards to promote sustainability and ESG in the segment…

Since last year CITI has been encouraging sustainability initiatives in the textile value chain through the textile sustainability awards for better carbon footprint, water management etc. This year, we plan to include the Best HR and Best Retail practices as new categories.