India’s textile and apparel sector employs over 45 million people, yet the communities most central to it remain the least visible in the financial frameworks designed to transform it
This learning report is the result of a year-long collaborative programme between the Impact Investing Institute in and the India Impact Investors Council, exploring how capital can be mobilised for a just transition across one of the world’s most labour-intensive industries.
Drawing on engagement with over 100 stakeholders across India and the UK, including investors, enterprises, brands, policymakers and intermediaries, the report identifies where the constraints lie and what it will take to move from isolated proof points to systemic change.
Five key insights
- The transition is held back by structural market failures, not technology. Solutions exist, but transition costs are concentrated upstream while benefits accrue downstream.
- Worker well-being, gender and climate resilience are material risks but financially invisible. The measurement frameworks needed to act on this are not yet consistently in place.
- The “missing middle” of the supply chain is India’s biggest leverage point. Tier-2 suppliers are central to environmental and labour outcomes but chronically underserved by capital.
- Circularity and new materials require systems-building, not just innovative finance. Scaling depends on infrastructure, coordination and demand alignment across the value chain.
- The finance landscape is mismatched to just transition needs. Capital is active but fragmented and poorly aligned with sector realities.
Across all five insights, a common thread runs: the constraint is not a lack of capital or solutions, but how both are structured and aligned. The direction of travel is nonetheless clear, and early evidence from across the sector points consistently towards three categories of solution.
What the evidence points towards
- Financing structures that reflect sector realities, including blended credit facilities, tri-party arrangements between brands, banks and development finance institutions, and impact-linked structures that tie the cost of capital to measurable just transition outcomes.
- Ecosystem enablers that connect capital to need, from cluster-level coordination of recyclers and manufacturers to inclusive circular models that build worker agency into their design from the outset.
- Practical frameworks for integrating just transition into investment practice, including investor-facing toolkits and emerging guidance on extending just transition expectations explicitly to upstream and downstream value chains
Download the report to explore
- Practical examples of emerging models, including blended finance blueprints, cluster-level recycling initiatives and impact-linked financing structures, that are beginning to demonstrate what systemic change could look like
- Key insights from stakeholder engagement, including findings from over 25 in-depth interviews with investors, enterprises, brands, policymakers and intermediaries
- An investor mapping exercise drawing on perspectives from over 40 investors, revealing where capital is active, where it is absent and why
- Case studies from the Good Fashion Fund, Upaya Social Ventures, Omnivore and Saamuhika Shakti, illustrating what effective transition finance looks like in practice.