India’s textile industry is a vital contributor to the country’s economy, generating employment, driving exports and supporting industrial growth. As one of the largest producers of cotton and synthetic fibres, the sector encompasses everything from traditional handloom artisans to cutting-edge technical textiles.
However, challenges such as fluctuating raw material prices, outdated manufacturing infrastructure and global competition demand strong policy interventions for sustained growth.
The Union Budget 2025-26 seeks to address these challenges and propel the industry forward. Rising from INR 4,417.03 Cr in 2024-25 to INR 5,272 Cr—registering a 19% increase in allocation to the Textile Ministry—the budget reflects the government’s commitment to addressing long-standing challenges and unlocking new opportunities for growth.
Major highlight
The launch of a five-year Cotton Mission, with an allocation of INR 600 Cr aimed at revitalising India’s cotton sector, seeks to increase productivity, particularly for extra-long staple (ELS) varieties, by providing science and technology support to farmers.
By adopting global agronomy best practices and promoting clean cotton production, the initiative seeks to ensure a steady raw material supply, reduces imports, boosts competitiveness and enhances farmer incomes.
To boost domestic production of technical textiles, the budget has fully exempted two types of shuttle-less looms: Rapier Looms (below 650 meters per minute) and Air Jet Looms (below 1,000 meters per minute)—from customs duty, reducing it from 7.5% to nil. This move is expected to lower production costs, encourage modernisation and enhance the quality of high-value textile products, such as agro-textiles, medical textiles and geo-textiles.
Another key intervention is the revision of Basic Custom Duty (BCD) on knitted fabrics, increasing it from “10% or 20%” to “20% or INR 115 per kg, whichever is higher”. This change is aimed at curbing cheap imports and providing much-needed relief to domestic knitted fabric manufacturers, particularly in key textile hubs such as Surat and Ludhiana.
The budget also provides significant support for the handicrafts sector, which represents India’s rich cultural heritage. The duration for export of handicrafts manufactured from duty-free inputs by bona fide exporters will be extended to one year, further extendable by three months. Additionally, nine new items, including wool polish materials, seashells, Mother of Pearl (MoP) and cattle horn, have been added to the list of duty-free inputs, reducing input costs for handicraft exporters and further promoting traditional Indian arts and crafts.
Recognising the importance of MSMEs in the textile sector, the budget introduces initiatives such as enhanced credit access, export promotion measures and the creation of the Bharat Trade Net. This digital platform will streamline trade documentation, facilitate smoother global integration and ease market access for small and medium textile enterprises.
Additionally, INR 1,148 Cr has been allocated for the PLI Scheme to boost domestic manufacturing and exports, while INR 635 Cr for the Amended Technology Upgradation Fund Scheme (ATUFS) supports modernisation and efficiency in textile machinery.
The Union Budget is not just a financial plan but a visionary blueprint for the future of India’s textile industry. By addressing critical areas such as cotton productivity, technical textiles, export promotion and handicrafts, it aims to create a more sustainable, innovative and globally competitive sector.
For stakeholders across the value chain—from farmers and artisans to MSMEs and exporters—this budget is a clarion call to embrace transformation and unlock the full potential of India’s textile industry. As the sector gears up for this new year, the focus must now shift to effective implementation and collaboration between the government, industry and artisans
This blog is written by Akshita Wadhwa
