For decades, the donation bin has offered consumers in rich countries a guilt-free way to unload their old clothing.

In a virtuous and profitable cycle, a global network of traders would collect these garments, grade them, and transport them around the world to be recycled, worn again, or turned into rags and stuffing.

Now that cycle is breaking down. Fashion trends are accelerating, new clothes are becoming as cheap as used ones, and poor countries are turning their backs on the second-hand trade. Without significant changes in the way that clothes are made and marketed, this could add up to an environmental disaster in the making.

Nobody is more alert to this shift than the roughly 200 businesses devoted to recycling clothes into yarn and blankets in Panipat, India. Located 55 miles north of Delhi, the dusty city of 450,000 has served as the world's largest recycler of woollen garments for at least two decades, becoming a crucial outlet for the $US4 billion ($5 billion) used-clothing trade.