How does the evolution of the Circular Economy contribute to a deeper understanding of the digitization process using Circular Transition Indicators (CTI) for the sustainable advancement of India’s textile and apparel industries while also considering the utilization of use cases from micromanufacturing within the sector? The core of Circular Economy (CE) is preserving Earth’s resources and reducing wastage for sustainability. Success relies on efficient resource and waste management. Digitalizing CE, particularly in textiles, is vital for long-term benefits. Multi-stakeholder technology enhances CE processes. Circular Transition Indicators (CTI) provide alignment crucial for industrial growth. A thorough shift to CE, with CTI-driven digitalization, is vital for sustainability in the textile industry. A sustainable value chain is critical for garment manufacturing’s future. It uses technology to mitigate environmental impacts and spur growth. Amid rapid urbanization and rising living costs, with COVID-19 triggering mass migration back to villages, companies invested in decentralized micromanufacturing, capitalizing on reverse migration. This resulted in bringing factories closer to workers, moving labour-intensive tasks like sewing to villages near major manufacturing centres. This decentralized system upheld sustainable development pillars by reducing the carbon footprint of urban resource strain, utilizing rural ecosystems, and investing in them. It cut manufacturing costs while enhancing social conditions, especially for women who worked closer to home with flexible hours. It also nurtured local entrepreneurship by training individuals to manage facilities, and fostering community employment. Thus, the convergence of the Circular Economy, CTI-driven digitalization, and innovative micro-manufacturing fosters sustainability in the textile industry. It optimizes processes and spurs economic and social development.