Charting a New Chapter for Next Gen Fibre Production in India: Reflections from Investment Roundtable

Last week’s roundtable on investing in India’s Next Gen Fibre Ecosystem: Textiles and Packaging, marked a significant step in the global transition to low-carbon, circular supply chains. Convened by Canopy, Invest India, and the UN India, the closed-door summit brought together a cross-sectoral group of investors, policymakers, industry leaders, and companies to align on a shared path forward for scaling Next Generation (Next Gen) materials in India.

These materials—produced from agricultural residues, recycled textiles, and other waste streams—offer a viable alternative to forest-based fibre, delivering strong environmental performance (88–100% less land use; approximately four tonnes less CO₂ per tonne) to meet growing market demand from our over 1000 brand, innovator, and producer partners (who have $2 trillion US in annual combined revenue).

For investors, Next Gen fibre represents an opportunity to enter a scalable, climate-aligned sector with increasing regulatory tailwinds and clear offtake interest from global brands.

Next Gen fibres offer a credible, scalable alternative, replacing high-impact inputs with agricultural residues, recycled textiles, and other waste streams that would otherwise be burned or taken to landfill. This shift not only alleviates pressure on Ancient and Endangered Forests but also reduces pollution, enhances supply-chain resilience, and creates new economic value across the fibre economy.

The dialogue at the roundtable underscored both the urgency of transforming high-impact supply chains and the significant opportunity for India to lead this transformation. With clear next steps emerging and strong momentum heading into COP30, the roundtable opened a path to develop a $2 billion US blended-finance platform in India, setting the stage for a new chapter in climate-aligned industrial transformation.

1. India Is Positioned for Global Leadership in Circular Fibre Production

India generates vast volumes of underutilized feedstocks—around 500 million tonnes of agricultural residues and eight million tonnes of textile waste, annually. When redirected, these inputs fuel a new generation of paper, packaging, and textile production that is lower-carbon and lower-cost, and that reduces water use and alleviates pressure on the world’s most climate- and biodiversity-critical forests.

India’s existing non-wood-pulp infrastructure, textile-recycling capacity, technical expertise, and growing regulatory alignment position it as a first mover in the global Next Gen economy. Roundtable discussions highlighted India’s capacity to scale to over 10 million tonnes of Next Gen fibre production, and up to $15 billion US of investment flow, annually, by 2033.

2. Blended Finance Will Be Critical to Scaling Infrastructure

Participants agreed on the need for catalytic capital to unlock India’s Next Gen potential. Canopy and partners are advancing a $2 billion US blended-finance platform to accelerate infrastructure deployment—from greenfield mills and retrofits to feedstock aggregation and advanced textile recycling.

If successful, the platform will be replicable and exportable, offering a model that can support transitions in key regions beyond India. The ambition is to lay groundwork for a public announcement ahead of COP30 in Belém, Brazil, where forest finance and industrial decarbonization are expected to be central themes.

3. Market Demand and Policy Signals Are Aligning

The transition to Next Gen materials is being driven by market demand from major global brands, evolving regulations like the EU Deforestation Regulation, and growing volatility in conventional forest-based supply chains.

Over 1,000 Canopy brand, innovator, and producer partners—with collective annual revenues exceeding $2 trillion US—have committed to phasing out fibre from Ancient and Endangered Forests in preference of Next Gen fibre. These commitments provide a critical offtake market for investors entering the Next Gen space.

4. Climate and Biodiversity Benefits Are Tangible

Participants discussed the value proposition of Next Gen solutions as a climate- and nature-positive investment. Compared to conventional wood fibre, Next Gen materials offer:

• 88–100% less land use
• Four tonnes less CO₂ per tonne of product
• 5 times lower biodiversity impact

In the Indian context, Next Gen materials also offer the potential to reduce the current practice of burning 100 million tonnes of agricultural waste each year, which generates up to 40% of local air pollution from October to December and contributes to an average of 150 premature deaths each day.

5. Unlocking Rural Livelihoods and Supply-Chain Inclusion

India’s agricultural economy, which supports over 60% of the population, stands to benefit directly from the build-out of Next Gen fibre infrastructure. By using crop residues like wheat straw and rice husks as pulp feedstock, the sector can generate new income streams for smallholder farmers and rural collectors. Likewise, if poly/cotton textiles — which currently have limited end uses — can be valorized through new recycling technologies, this development could create stable and higher-value markets for urban and informal textile-waste collectors.

As part of a decentralized supply chain, these activities have the potential to improve livelihoods, reduce seasonal stubble burning, and bring stable, value-added revenue into regions that are often underserved by industrial development. This marks a critical intersection of climate impact, social equity, and inclusive growth.

What’s Next

In the months ahead, Canopy will expand engagement with partners — including federal and state governments, multilateral development banks, industry associations, and corporate buyers — to formalize the finance platform structure and secure anchor participants. Working groups will identify early projects, define capital pathways, address opportunities and barriers for scaling, and advance industrial and environmental policy.

The aim is clear: Build momentum from the roundtable into concrete outcomes, and arrive at COP30 with a compelling platform ready for launch.

📩 Contact: info@canopyplanet.org
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