Indian textile sector struggles with energy intensity despite renewable push: ICRA report

India’s textile manufacturers are adopting renewable power at a record pace, yet the sector faces a widening efficiency gap as energy intensity continues to rise, according to a new analysis by ICRA ESG Ratings Ltd.

The report, titled Sustainability Unstitched, assessed 19 leading textile firms—including Page Industries, Welspun Living, Arvind, and KPR Mill—tracking sustainability performance from FY2023 through FY2025.

Data shows that the average share of renewable energy in the sector’s total consumption climbed from approximately 14% in FY2023 to nearly 18% in FY2025. However, the energy required to generate each crore of revenue increased by 6–8% over the same period, signaling that production scaling and premiumization are outpacing efficiency gains.

Apparel Leads the Green Shift

Apparel manufacturers are at the forefront of the transition, increasing renewable usage from 26% to 28%. The shift is largely driven by the deployment of rooftop solar solutions, which are well-suited for electricity-heavy operations like cutting and stitching.

The yarn and fabric segment recorded the steepest growth curve, moving from just 3% renewable usage to 8%, as companies commissioned new solar and biomass projects. Integrated players also improved, rising from 17% to 21% via bulk green power contracts.

The Intensity Paradox

Despite greener power sources, energy intensity—a key metric of operational efficiency—has deteriorated.

• Apparel makers saw a sharp 28% jump in energy consumed per unit of revenue, attributed to higher production volumes and a strategic pivot toward premium, energy-intensive finishing processes.
• Yarn and fabric manufacturers recorded an 8.5% increase in intensity, partly due to revenue volatility in FY2024.
• Integrated units remained the most resilient, limiting the rise to 6% through investments in automation and waste heat recovery systems.

Emissions and Transparency Gaps

The report paints a mixed picture on decarbonization. While some segments reduced greenhouse gas emission intensity, apparel producers saw a 12% rise linked to output growth.

Furthermore, transparency regarding indirect emissions remains low. Only 21% of surveyed companies disclosed Scope 3 emissions (value chain data) in FY2025, a critical gap as global buyers increasingly demand full supply chain traceability.

“Investments in advanced technologies and renewable energy solutions will be essential for ensuring India’s textile leadership in a sustainability-driven world,” said Sheetal Sharad, Chief Ratings Officer at ICRA ESG Ratings.

Brief Summary

A new ICRA ESG report reveals that while India’s textile sector increased renewable energy usage to 18% in FY2025, energy intensity has worsened by 6-8%. Apparel and yarn manufacturers are adopting solar and biomass power, but rising production demands and premium finishing processes are driving up overall consumption. The report warns that low disclosure of Scope 3 emissions remains a barrier to global competitiveness.

Frequently Asked Questions (FAQs)

Q1: Why is renewable adoption rising in textiles? 

Textile companies are shifting to renewables to cut operational costs and comply with strict global sustainability norms. International buyers are increasingly favoring suppliers with low-carbon footprints.

Q2: What is the “energy intensity” problem? 

Energy intensity measures how much energy is used to generate revenue. Even though companies are using cleaner energy, they are using more of it per unit of revenue. This is due to increased production volumes and energy-heavy processes required for premium fabrics.

Q3: Which segment is the greenest? 

The apparel segment leads with 28% renewable energy usage, primarily because rooftop solar is easy to install on garment factories.

Q4: What are Scope 3 emissions? 

Scope 3 covers indirect emissions in the value chain (e.g., raw material sourcing, logistics). Only 21% of Indian textile firms reported this data in FY2025, which is a concern for global ESG compliance.

Q5: What is the outlook? 

Experts say the transition is underway but too slow. To remain competitive against global rivals, Indian firms must accelerate investments in automation, waste heat recovery, and captive solar power.