Chennai, India: Tamil Nadu’s textile industry could unlock annual savings of up to Rs 3,250 crore by transitioning to renewable energy and adopting cleaner production technologies, according to a new report released by Climate Risk Horizons. The report highlights that decarbonisation is rapidly becoming not only an environmental necessity but also a key strategy for improving competitiveness in one of India’s most important export sectors.
Titled “Fashioning a Net Zero Future for Tamil Nadu’s Textile Sector,” the report estimates that a complete shift to renewable electricity could generate annual savings ranging from Rs 2,320 crore to Rs 3,250 crore. A broader transformation that includes electrification of industrial heating processes could deliver savings between Rs 1,560 crore and Rs 2,770 crore annually.
Rising Energy Costs Challenge Industry Competitiveness
Tamil Nadu is a cornerstone of India’s textile economy, accounting for nearly 27% of the country’s textile exports and around 25% of total textile production. However, rising fuel and energy costs have emerged as significant challenges for manufacturers.
According to the report, fuel expenditure within the state’s textile industry increased by nearly 47% between FY21 and FY24, while fuel cost intensity rose by approximately 17%, putting pressure on profitability amid relatively stagnant export growth.
Industry experts believe that reducing dependence on conventional fuels and increasing renewable energy adoption could significantly improve cost structures and operational efficiency.
Global Sustainability Regulations Driving Change
The report warns that international sustainability regulations are likely to accelerate the need for decarbonisation across textile supply chains.
Measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), Digital Product Passports, and stricter supply-chain sustainability requirements are expected to place increasing pressure on textile exporters to reduce carbon emissions embedded in their products.
India currently records one of the highest carbon footprints among major textile-exporting nations, with emissions exceeding 12.5 kg CO₂e per kilogram of textile produced, significantly higher than countries such as Vietnam, Bangladesh, and China.
As global fashion brands prioritize low-carbon sourcing, sustainable manufacturing could become a key competitive advantage for Indian textile exporters.
Biomass Dependence Raises Environmental Concerns
Beyond carbon emissions, the report highlights concerns regarding the sector’s growing reliance on biomass for industrial heating.
Researchers estimate that biomass consumption by textile units over the last decade may be equivalent to harvesting between 65 million and 108 million trees, raising concerns about long-term environmental sustainability. The report also notes declining forest cover in several textile-producing districts.
The findings reinforce the need for cleaner alternatives, including renewable electricity and electrified heat systems that can reduce environmental impact while maintaining production efficiency.
Barriers Continue to Slow Renewable Adoption
Despite Tamil Nadu being among India’s early adopters of industrial renewable energy, several structural challenges continue to hinder large-scale adoption.
The report identifies barriers including:
- Open-access charges
- Banking restrictions
- Transmission bottlenecks
- Limited renewable energy evacuation infrastructure
- Financing constraints for MSMEs
Small and medium-sized textile enterprises often struggle to secure funding for renewable energy installations and modern electrification technologies, slowing the pace of transition.
Recommendations for Policymakers and Industry
To accelerate the industry’s decarbonisation journey, Climate Risk Horizons recommends that the state government and regulatory authorities improve renewable energy accessibility through policy reforms and infrastructure upgrades.
Key recommendations include:
- Expanding renewable energy access
- Facilitating concessional financing
- Modernizing power transmission networks
- Supporting sector-wide renewable procurement models
- Developing a textile industry decarbonisation roadmap
The report also encourages textile associations to collaborate on collective renewable energy procurement initiatives that can reduce costs and improve adoption rates.
Carbon Markets Could Create New Revenue Opportunities
The report comes as India prepares to implement its Carbon Credit Trading Scheme (CCTS), which includes energy-intensive industries such as textiles.
Participation in carbon markets could provide additional revenue streams for companies investing in renewable energy, energy efficiency improvements, and electrification technologies. Combining domestic carbon trading opportunities with international low-carbon manufacturing standards could position Tamil Nadu as a preferred sourcing destination for global apparel brands.
Future Growth Linked to Sustainability
As fuel costs continue to rise and sustainability expectations increase across international markets, the report argues that decarbonisation should be viewed as a business opportunity rather than merely a compliance requirement.
By investing in renewable energy, cleaner technologies, and carbon reduction strategies, Tamil Nadu’s textile sector can strengthen profitability, improve export competitiveness, and establish itself as a global leader in sustainable textile manufacturing.
The report concludes that embracing green manufacturing practices today could help secure long-term growth, lower operating costs, and enhance the state’s position in the rapidly evolving global textile market.