Innovation, Sustainability and Growth: MSMEs as Catalysts in India's Textile Manufacturing Ecosystem

Abstract

This research investigates the dynamic interplay between innovation, sustainability, and growth in Micro, Small, and Medium Enterprises (MSMEs) within India's textile manufacturing sector an industry that accounts for approximately 45% of national textile exports and employs over 7 million individuals in decentralized units. The primary objective is to evaluate how the strategic integration of digital technologies and sustainable practices influences operational efficiency, global competitiveness, and long-term economic viability of textile MSMEs. Employing a mixed-methods framework, the study synthesizes data from structured surveys across 125 MSMEs and expert interviews with 20 stakeholders, including policymakers and industry consultants. The analysis leverages multi-variable regression models to assess the correlation between innovation inputs (e.g., R&D intensity, automation levels, ERP adoption) and key performance indicators (e.g., productivity growth, export volume, and energy efficiency index). Additionally, sustainability maturity was measured through indices such as compliance with ISO 14001/50001, effluent treatment capabilities, and participation in ZED and TUFS schemes. Findings reveal a statistically significant impact (p < 0.01) of combined innovationsustainability strategies on annual productivity and export growth. However, the results also highlight systemic constraints such as financial inaccessibility, technological inertia, and limited workforce upskilling, which impede scalable transformation. The study proposes a triadic policy model focusing on green financing, digital upskilling, and innovation cluster incubation to accelerate industrial modernization. This research advances scholarly understanding of MSME transformation pathways in emerging economies and provides actionable insights for policy architects aiming to align industrial development with national sustainability targets and global trade integration in the textile domain.