Though 12% of earnings from selling abroad come from textiles, the sector could do with more sops
The textile industry expects significant support from the Union Budget 2025-26 to enhance its global competitiveness and contribute to the nation’s goal of becoming a developed economy
India’s textile industry, one of the oldest and largest industries in the world, has experienced remarkable growth over the past decade. Accounting for approximately 7 per cent of the country’s GDP and 12 per cent of its export earnings, the sector has expanded due to favourable Government policies, technological advancements, and increasing global demand for Indian textiles.
This order of growth has been marked by a shift from traditional handloom and handicrafts to organised production in large-scale textile manufacturing units, while still preserving the rich heritage of Indian craftsmanship.
The industry expects significant support from Union Budget 2025-26 to enhance its global competitiveness and contribute to the nation’s goal of becoming a developed economy.
The key expectations include: Removal of import duties on various cotton fiber varieties, particularly specialised ones like organic and contamination-free cotton, which are not readily available domestically. This measure aims to align domestic prices with international levels, ensuring raw material availability at competitive rates.
To mitigate the challenges posed by price volatility, the industry has proposed the establishment of a stabilisation fund. This fund would offer mechanisms such as interest subvention and extended credit limits, enabling textile mills to plan and operate more efficiently.
There is a call to extend production-linked incentive (PLI) schemes to encompass small and medium-sized textile firms. Such an expansion is expected to boost garment exports and stimulate investment across the sector.
The industry seeks increased support for skill development programmes, including incentives for worker training, to improve productivity and product quality. Previous budgets have introduced skilling incentives, and further enhancements are awaited.
A reduction in customs duties on essential raw materials, such as methylene diphenyl diisocyanate (MDI) used in spandex yarn production, is expected to lower input costs and enhance the competitiveness of domestic manufacturers.
These measures are expected to address current challenges and propel the Indian textile industry toward sustainable growth, aligning with the broader vision of a developed India.
The Government’s initiatives have been a critical driver of growth. The PLI scheme, launched in 2021, aimed to boost the production of man-made fibers (MMF) and technical textiles, segments where India has historically lagged. The Integrated Textile Parks (SITP) programme facilitated the development of state-of-the-art infrastructure, attracting private investments. Additionally, the implementation of GST streamlined the tax structure, benefiting the industry by reducing costs and enhancing competitiveness.
India has also emerged as a hub for MMF products and technical textiles, driven by innovation in areas like industrial fabrics, geotextiles, and medical textiles. Exports of these products have increased steadily, with major markets being the United States, Europe, and the Middle East. Domestically, rising incomes and changing fashion trends have boosted demand for both branded apparel and traditional attire, such as sarees and ethnic wear.
Despite its achievements, India’s textile industry faces significant competition from global textile-producing countries like China, Bangladesh, and Vietnam. China dominates the global textile trade with its highly efficient manufacturing and economies of scale. Bangladesh, with its low labor costs and favorable trade agreements with Western countries, has become a key player in apparel exports. Vietnam has also emerged as a strong competitor due to its focus on free trade agreements, quality manufacturing, and diversification into high-value products.