A Closer Look: India’s Textile Recycling Industry
What is the true cost of recycling?
That has been a tough question to answer in India. Despite possessing more than 8.5 percent of global textile and apparel waste—generated by the sprawling local industry, a huge population, and through imported post consumer waste—most of the data surrounding this sector is informal.
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Sourcing Journal took an in-depth look at the essential numbers with an exclusive preview of the first report of its kind that analyzes costs, essential ecosystems, the burden on waste handlers and how recyclers and the industry can better streamline itself.
The report, “Unveiling India’s Textile Waste Landscape: A Cost Analysis,” will formally launch on Dec. 1 at a conference in New Delhi with some of the biggest players in the space including IDH, Fashion for Good, Canopy Planet and Laudes Foundation on hand.
The report was put together by IDH, a Netherland-based organization which works in countries around the world to catalyze positive change for the environment and gender equality, and Sattva Consulting, a leading firm in the social impact sector.
Unscrambling the true cost is a complex exercise in an unorganized industry, but it’s clear that the burden falls heavily on waste procurement itself—which accounts for more than 60 percent of the daily operating cost.
According to Anjali Krishnan, program manager, IDH: “The government has shown interest and the brands are quite happy to better understand this, because these numbers were not available in the industry before this report was released. They are keen to see where the opportunities lie based on their current trajectory. Some brands are very well developed with their sustainability targets, others are just entering the space—but for both this is a way to continue on this journey in the sustainable textile space.”
Clearly, the government is realizing the stakes are high as well.
Noting that this provided crucial insights into the costs and business viability of key stakeholders across the textile waste value chain, Prajakta Verma, joint secretary, ministry of textiles, said that the ultimate goal was “to mainstream the textile waste chain in India and establish a closed loop textile industry.”
Having worked extensively on the report, Mansha Balecha, senior consultant, Sattva Consulting, said she was struck by the stark variation of the profits earned by companies, and the fact that this is not passed along to the stakeholders down the value chain.
“The companies higher in the textile value chain are able to access the best quality waste and produce the best quality output, as the market dynamics work for them. But it won’t work for those lower in the value chain. From a social, economic and environmental perspective, they are equally important as stakeholders. So, we have to create equitable structures that help all stakeholders, including those working just to survive, and that calls for more collaborative work. It cannot be a free market situation because it is an industry about waste at the end of the day,” she said.
The study looked at costs for five different kinds of waste handlers including those for pre-consumer (collectors, aggregators and start ups), as well as post-consumer waste (importers and aggregators).
It found that operating costs for pre-consumer waste handlers range between 8 cents to $2.11 per kilogram. Typically, collectors handle 3 metric tons a day and aggregators handle 5 metric tons.
Post-consumer handlers pay 7 cents to $1 per kilogram, with both importers and aggregators handling 50 metric tons daily. However, their capital expenses are significantly higher.
The study also looked at different types of recycling operations including high grade, low grade and new-age technologies.
Low-grade mechanical recycling is the most mature and widely present type of recycler in India as these players accept a wide range of product and typically deal with 10 to 30 metric tons per day. They can process knitted cotton waste, irrespective of color and percentage of cotton. Low-grade mechanical recycling runs 31 cents to $1.50 per kilogram, of which 60 percent is the cost of procurement and 40 percent the cost of labor, utilities and miscellaneous.
High-grade mechanical recyclers deal with 100 percent cotton, knitted, solid-colored waste, and handle 10 to 30 metric tons per day. The operating cost of a high-grade mechanical recycler is 7 cents to $1.29. Of this, 72 percent is the cost of procurement, 21 percent is the cost of labor and utility, while the rest is the cost of salaries and other expenses. High-grade recyclers also require nearly three times more initial capital than a low-grade mechanical recycler.
Downcyclers handle all kinds of colored and printed waste, including cotton, polyester and blends. Sorting and shredding of waste capacity is approximately 10 to 20 metric tons per day, with a per kilogram cost of 20 cents to $1.12, 74 percent of which is the cost of procurement and 22 percent the cost of labor, utility, and other.
Systemic interventions are necessary. Challenges faced by manufacturers include: a lack of recognition for waste trade in the ecosystem; few ways to identify credible collectors; a high cost of sorting and storing and not enough returns to scale up.
The few manufacturers who do want to set up their own recycling facilities are hampered by the limited supply of waste and the limited demand for recycled products.
“Hence the economics of setting up a facility do not work in their favor. They find it cheaper to procure recycled yarns from established vendors,” the report noted.
“When we look at costs for managing the textile waste, what took me by surprise is just how high some of the numbers are. No one size fits all in terms of the solutions,” Anjali Krishnan said. “There will always be winners and losers, that’s just how the market is built. As per the report, 8.5 percent of global textile and apparel waste is in India and the reality of the situation is that this entire amount cannot be recycled. The highlight of the cost analysis report is that it details opportunities which are not necessarily only going to be about how much waste you can recycle or change or what the costs are, but about what will enable us to adjust and build the ecosystem, knowing the costs involved.”
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