The Indian textile manufacturing industry, a foundation of the nation’s economy, significantly contributes to water pollution due to the discharge of untreated or partially treated wastewater. This wastewater, laden with dyes, heavy metals, surfactants, and other organic pollutants, poses serious environmental and health threats to aquatic ecosystems and local communities. Numerous case studies across India, including regions like Tiruppur (Tamil Nadu), Panipat (Haryana), and Surat (Gujarat), emphasize the extent of water contamination and the socio-environmental consequences of inadequate wastewater management. These regions also provide insights into diverse treatment strategies adopted by industries and municipalities. This study synthesizes findings from key case studies, evaluating the effectiveness of traditional and modern treatment technologies such as Common Effluent Treatment Plants (CETPs), Zero Liquid Discharge (ZLD) systems, membrane filtration, and bioremediation approaches. The literature reveals challenges in enforcement, high operational costs, lack of technological upgrades, and gaps in policy implementation. However, successful examples demonstrate that with proper investment and regulatory support, sustainable wastewater management is achievable. This study aims to offer a comparative perspective on wastewater treatment strategies in the textile sector and explore policy implications, emphasizing both failures and successes. It also discusses the need for circular water use, industry collaboration, and community engagement. The insights presented are intended to guide researchers, policymakers, and stakeholders toward more sustainable water management practices in India’s textile industry.