EU’s New Green Rules and What They Mean for India

On 25 June 2025, the European Commission unveiled a set of rules requiring apparel and footwear companies to measure and report the full environmental impact of their products throughout their lifecycle. This initiative, part of the Product Environmental Footprint Category Rules (PEFCR), introduces a science-based assessment methodology to measure environmental performance from raw material extraction, manufacturing, and logistics through product use and end-of-life disposal. The announcement, welcomed by industry stakeholders and environmental organisations in Brussels, marks a significant step toward more transparent, accountable, and circular economies, both within the EU and in global value chains that involve countries such as India.

These new PEFCR guidelines, developed over a period of five years with contributions from businesses, non-governmental organisations, national authorities, and technical experts, represent a major advance in the EU’s efforts to create a consistent and impartial approach to reporting environmental footprints. According to the Commission, “these rules treat all materials equally, favouring no specific type of product or fibre”. In other words, whether a garment is made of cotton, polyester, wool, or a blend, the same rigorous lifecycle assessment standards will apply. For companies based in India, where textiles and footwear form a significant part of exports to the EU, this means that product designs, supply chains, and market strategies must align with these new rules to maintain competitiveness and compliance.

By defining these category-specific methods, the EU aims to help businesses identify areas where environmental improvements are possible such as reducing water use in cotton production, improving energy efficiency in factories, or enhancing recycling systems at end of life. In strengthening the tools available for sustainable design and production, the Commission underlines that this initiative supports its broader Strategy for Sustainable and Circular Textiles and the Ecodesign for Sustainable Products Regulation. These overarching policies promote more durable, repairable, and resource‑efficient goods across a variety of sectors.

India, as a key participant in global textile supply chains, stands to be both challenged and enriched by this evolution. On one hand, manufacturers exporting to the EU must now adopt additional data collection, environmental reporting, and product lifecycle documentation. On the other hand, these standards create opportunities for Indian companies with strengths in natural fibre processing, low‑impact dyeing techniques, or social responsibility practices to shine. With rising demand among global consumers for verifiable sustainable credentials, alignment with the PEFCR could unlock new market segments for Indian exporters, while accelerating technological transfers and green investment in India’s industry.

The ecology-aware guidelines are not static. The Commission has expressed its intention to refine and expand the program over time. Future versions may include metrics on microplastic shedding, an important issue for synthetic garments and indicators of biodiversity impact. For Indian suppliers, this signals a need to keep a close watch on evolving compliance requirements. They must prepare not only for the present rules but also for future developments that may require additional tests, traceability measures, or supply chain adjustments.

The Commission emphasised that the PEFCR method was “science‑based and impartial”, and “helps businesses identify where improvements can be made, encourages more sustainable design and production practices, and supports the EU’s transition to a competitive circular economy”. This statement captures the dual ambition of environmental accountability and economic resilience. The EU has charted a path where ecological stewardship is integrated with commercial competitiveness, and compliance becomes a business opportunity rather than a cost.

From an Indian perspective, these new rules underscore the importance of cooperation with European regulatory authorities, capacity building in sustainable technologies, and trade diplomacy to ensure fair transitions. India and the EU already engage in several dialogues on trade, sustainability, and circular economy. The PEFCR initiative provides a concrete focus for joint technical workshops, knowledge exchange, and partnerships between European and Indian research institutions, private sectors, and governmental agencies. Indian trade representatives may explore agreements to promote harmonised standards or mutually recognised certifications similar to existing frameworks with Japan and other partners.

At the same time, India has robust domestic initiatives addressing environmental sustainability in textiles: the government has promoted zero liquid discharge in textile parks, water recycling, organic cotton production, and photovoltaic-powered processing units. Indian industry associations could further align their guidelines with PEFCR criteria to better prepare their members for upcoming export requirements. Meanwhile, public–private cooperation, supported by government subsidies or loans for sustainability upgrades, could be pivotal in scaling compliance efforts within smaller and medium-sized enterprises—a large segment of India’s textile and footwear export base.

In economic terms, approximately 10–12 % of India’s merchandise exports go to the EU, with textiles and garments accounting for nearly 40 % of that share. Footwear and leather goods are also significant export categories. The PEFCR rules will therefore affect a considerable portion of Indian manufacturing. By enabling early adaptation, Indian exporters can protect and possibly enhance their position in EU markets. They may secure first-mover advantages by offering products with transparent environmental data or even collaborate with EU brands in co‑creating sustainable collections backed by verified lifecycle assessments.

The PEFCR framework is complemented by the EU’s green claims policies, which set clear requirements on how companies can substantiate environmental claims and labels. This matters greatly, since consumers and retailers in the EU increasingly demand third‑party verification or certification. Indian manufacturers seeking business-to-business contracts with European brands must therefore build internal compliance systems capable of meeting both the PEFCR methodology and external verification requirements. This ecosystem expands opportunities for certification bodies, technical auditors, and service providers in India, who can assist factories in conforming to European expectations.

In conclusion, the EU’s new science-based rules for measuring the environmental impact of clothes and shoes represent a significant step forward in aligning commerce with climate responsibility. They establish a level playing field across fibres and supply chains, promote more sustainable design practices, and support the circular economy agenda. For India, the rules present both challenges and unique opportunities: by aligning with PEFCR through technological upgrades, enhanced data systems, and workforce training, Indian industry can safeguard access to EU markets while contributing to global sustainability objectives. Policy dialogue and collaborative action between the EU and India will determine how broadly and equitably these standards drive change.