One of the biggest and most established industries in India is the textile industry, which makes a substantial contribution to employment opportunities and economic development. But in the past few decades, the exponential growth of textile industry has resulted in a number of environmental and social issues. The uncontrolled disposal of effluents generated from the textile sectors poses significant risk and adverse impact on health, aesthetics, and the environment. Thus, the industry needs a transition to a circular economy to reduce waste, protect resources, and keep materials moving along the value chain. To move towards a circular economy approach, the Indian textile industries have been concentrating more on pollution control and cleaner production techniques in recent years. For that, the textile industries adopt various eco-friendly approaches such as waterless dyeing, digital printing, and eco-friendly chemical treatments that minimise the use of water, energy, and chemicals, while also reducing waste generation. In addition, the Indian government is encouraging cleaner production and pollution avoidance techniques in the textile industry by offering regulatory assistance and incentives. This review article addressed the revolution of textile industrialisation, progress, and the environmental concerns associated with the unsustainable practices of textile sectors. It also highlighted the sustainable solutions for cleaner production and pollution control in textile industry. In addition, a brief discussion is also given on the legislation, strategies, and policies that the Indian government has created to globalise the textile industry, promote eco-friendly methods to reduce pollution, and achieve the Sustainable Development Goals (SDGs). The extracts from this review can help policymakers, industry professionals, environmental consultants, and academics recognise and progress the circular economy in the textile processing sector by sustainable practices.