Indian recycled yarn manufacturer Usha Yarns Limited has secured a growth equity investment from Asia-focused investment specialist Fullerton Carbon Action Fund to increase production and expand its business with global apparel and textile brands. The investment amount and the equity stake acquired by Fullerton were not disclosed.

The Chandigarh-based manufacturer said the funding will support the expansion of its recycled yarn capacity, improve raw material traceability, and broaden its product range and customer base. However, it did not specify the planned capacity increase or provide an expansion timeline.

Founded in 1995, Usha operates recycling and yarn manufacturing facilities near Chandigarh in northern India. The company claims an annual production of more than 18,000 metric tons of recycled yarn, converting post-industrial cotton waste and polyester fiber made from recycled PET bottles into products sold under the Puneh brand. Usha is also piloting the use of post-consumer garment waste through fashion brands' take-back programs, though its existing circular initiatives mainly target reducing cutting waste generated by garment manufacturers.

The company's recycled cotton operations use colored textile waste to produce yarns in more than 120 color shades without additional dyeing steps. Beyond lowering processing costs, preserving the colors already present in waste materials also avoids the water, energy, and chemical consumption involved in conventional yarn dyeing.

Anurag Gupta, Managing Director of Usha Yarns, said: "For over two decades, we have built deep expertise in transforming textile waste into high-quality, affordable recycled yarns. We look forward to embarking on a new chapter for Usha Yarns together with Fullerton—bringing our products to more brands worldwide and meeting their growing demand for traceability and reliability."

Producing apparel-grade yarn from mechanically recycled cotton remains technically challenging. Shredding and re-opening textile waste shortens fiber length and weakens its strength, affecting the strength and consistency of the resulting yarn. According to an analysis by the European Commission's Joint Research Centre, most textile waste currently mechanically recycled goes into lower-value applications such as insulation, filling, or cleaning cloths, rather than new garments.

Akhil Jain, Partner at Fullerton Carbon Action Fund, noted: "In the textile industry, achieving mechanical cotton recycling with consistent, brand-grade quality is one of the hardest things to do, and Usha Yarns is one of the very few companies that has proven this at scale."

Usha has previously invested in spinning equipment capable of handling high proportions of short fibers in recycled materials. In 2024, machinery manufacturer Rieter listed Usha as the first spinning mill to receive the Com4recycling-rotor license. Rieter said its R 37 rotor spinning system increased Usha's output by 10% and reduced energy consumption by 25% compared with conventional equipment.

However, this investment comes as recycled materials still account for a small share of the global fiber market. According to Textile Exchange's latest Materials Market Report, recycled fibers accounted for only 7.6% of the 132 million metric tons of global fiber production in 2024. Nearly all of that came from polyester made from plastic bottles; fibers from pre-consumer and post-consumer textile waste accounted for less than 1%, highlighting the huge gap between brands' circularity commitments and existing textile-to-textile recycling capacity.

Usha holds certifications including the Global Recycled Standard (GRS) and the Recycled Claim Standard (RCS), which provide the chain-of-custody requirements needed to track recycled materials in the supply chain. Other certifications and assessments include Oeko-Tex Standard 100, ISO management standards, the Higg Facility Environmental Module, and the ZDHC chemicals management program.

Fullerton Carbon Action Fund completed its first fundraising of $100 million in 2024. Managed by Singapore-based Fullerton Fund Management, it focuses on investing in established, profitable mid-sized companies in India and Southeast Asia engaged in manufacturing, industrials, energy, mobility, agriculture, and the circular economy. Fullerton is part of Seviora, a management group created by Temasek. Unlike climate funds focused on early-stage technology or infrastructure projects, its carbon strategy aims to support existing businesses with established revenue and cash flow, providing capital and operational support for expansion.

Jain said: "As global brands move from sustainability commitments to mandatory requirements, demand for recycled materials will outstrip supply." Fullerton's role is to help Usha increase capacity, expand its product portfolio, and reach more customers, while building a "durable, institutional-quality business."

Source: Fullerton Backs Usha Yarns’ Expansion in Recycled Fiber Production · Originally published on 2026-08-20