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India Brings Textiles Under Carbon Market Compliance

• By  Textile Excellence
• February 15, 2026

The Government of India has expanded its Carbon Credit Trading Scheme (CCTS) to include 208 additional carbon-intensive industries, notably textiles, petroleum refineries, petrochemicals, and secondary aluminium. The notification now brings the total number of obligated entities to 490, including 173 from the textile sector, across India’s most emissions-heavy sectors.

For the textile industry, long a backbone of India’s manufacturing and export ecosystem, this is a landmark move. Textile mills, spinning units, and composite facilities will now be required to meet specific Greenhouse Gas Emission Intensity (GEI) reduction targets, formally integrating them into India’s carbon market framework. This is more than regulation, it is a push towards cleaner technologies, energy efficiency, and sustainability.

The CCTS, introduced in 2023, operates through two mechanisms:

1. Compliance Mechanism – where obligated entities must meet assigned GEI targets.
2. Offset Mechanism – which allows entities that exceed targets to earn Carbon Credit Certificates, which can then be traded with industries falling short.

Since its inception, the Indian Carbon Market (ICM) covered sectors like aluminium, cement, chlor-alkali, and pulp & paper, encompassing 282 entities. Bringing textiles into this fold is a major milestone given the sector’s size, energy consumption, and role in industrial output.

Officials say this expansion reflects years of technical assessment and stakeholder engagement, ensuring the framework is practical for diverse textile units, from large spinning mills to composite facilities. By incentivising emission reduction while allowing trading flexibility, the scheme aims to balance industrial growth with India’s net-zero commitments.

For textile businesses, the message is clear: adapt or face rising costs. Mills and garment manufacturers can gain a competitive edge by investing in energy-efficient machinery, cleaner processes, and leveraging carbon credits as an additional revenue stream. Over time, this could position India’s textile industry as a global leader in sustainable manufacturing.

India’s textile industry at a glance

The Indian textile sector is massive and fragmented:

• Over 15,000 textile mills nationwide, including spinning and composite units.
• Around 1,700+ cotton textile mills, primarily spinning and composite facilities.
• Millions of handlooms and powerlooms in weaving.
• Tens of thousands of processing and finishing units.
• Over 77,000 apparel manufacturing units engaged in garment production.

This decentralised network powers India’s industrial output and employment but also creates challenges in standardising energy efficiency and carbon compliance.

Why only 173 textile units are obligated

The CCTS notification lists 173 textile units as obligated entities. This seems low compared to thousands of industry players, but there’s logic behind it:

• Only the largest, most energy-intensive facilities are covered initially - steam boilers, thermal plants, electric kilns, and continuous dryers.
• Facilities with the highest GHG emissions per unit of output are targeted first.
• Smaller mills, independent weavers, most powerlooms, and many processing units fall below mandatory reporting thresholds.

Regulatory focus begins with major emitters. Smaller facilities may be added later, or incentivised through offset and aggregated compliance schemes.

Perspective and key insight

• The rules currently cover top-tier emissions contributors, not the entire textile sector.
• Expansion is expected as compliance and reporting systems mature.
• The focus is on facilities where emission reductions deliver the greatest measurable impact.

Bottom line: India’s textile sector faces a turning point. The carbon compliance push is both a challenge and an opportunity, rewarding innovation, energy efficiency, and sustainability leadership. Textile leaders who act now will not only comply but can also position themselves as global front-runners in the emerging low-carbon economy.

Faster CETP establishment improves treatment capacity and compliance. It also enables reuse of treated water, lowering freshwater costs for industrial clusters. Centralised treatment and professional operation lead to more efficient and sustainable industrial practices. By removing bottlenecks without compromising safeguards, the reform strengthens pollution control infrastructure, aligns with India’s sustainability goals, and positions industrial clusters, especially textile and SME-heavy regions, for responsible, compliant, and efficient growth.