Union Budget 2025-26: Major Boost for India’s Textile Sector with Record Investments and Initiatives

Bhubaneswar: The Union Finance Minister presented the Union Budget for 2025-26 on February 1, unveiling a transformative vision for India’s textile sector. The budget allocated Rs. 5272 crores for the Ministry of Textiles, marking a 19% increase over the previous year’s allocation of Rs. 4417.03 crore. This substantial increase is aimed at addressing key challenges in the sector, modernizing production, and enhancing global competitiveness.

A key highlight of the Budget is the launch of the Cotton Mission, a five-year initiative aimed at addressing stagnant cotton productivity, particularly focusing on extra-long staple varieties. The mission will incorporate Science & Technology support for farmers and is designed to significantly boost farmers’ incomes while stabilizing raw material availability. By enhancing domestic productivity, the mission is expected to reduce import dependence and strengthen India’s textile sector, where 80% of the capacity is driven by Micro, Small, and Medium Enterprises (MSMEs).

The Cotton Mission is in line with the 5 F principle—Farm to Fibre, Fibre to Factory, Factory to Fashion, Fashion to Foreign—and is poised to increase India’s export capabilities, thus making the textile industry more competitive globally.

To further boost the domestic production of technical textiles such as agro-textiles, medical textiles, and geo-textiles, the Budget announced that two additional types of shuttle-less looms would be fully exempted from textile machinery duties. Rapier Looms (below 650 meters per minute) and Air jet Looms (below 1000 meters per minute) will now have nil duty instead of the previous 7.5%. This move is expected to reduce the cost of imported looms, facilitating modernization and capacity enhancement in India’s weaving sector. Additionally, it will promote the Make in India initiative, particularly in technical textiles.

Another crucial provision in the Budget focuses on knitted fabrics, where the Basic Custom Duty has been increased to 20% or Rs. 115 per kg—whichever is higher. This measure is aimed at improving the competitiveness of Indian knitted fabric manufacturers while curbing cheap imports that threaten the industry’s sustainability.

In a significant move to support handicraft exports, the government has extended the export timeline for handicrafts from six months to one year, with an option for a further extension of three months. This will provide much-needed relief to artisans and help boost handicraft exports. Moreover, the Budget added nine items including wool polish materials, sea shells, and Mother of Pearl (MOP) to the list of duty-free inputs, making it easier for producers to access raw materials without incurring additional costs.

The Budget also focuses on empowering the MSMEs in the textile sector, with initiatives such as the creation of a National Manufacturing Mission and Export Promotion Mission. A Fund of Funds will be set up to provide enhanced credit facilities, and measures for labour-intensive sectors will be introduced to promote employment and entrepreneurship.

Additionally, the Bharat Trade Net will be established to facilitate smoother and more transparent trade practices. These initiatives aim to create a conducive environment for the growth and expansion of India’s textile sector, which plays a significant role in the country’s economy.

Overall, the Union Budget 2025-26 lays a solid foundation for the growth of the textile industry by focusing on key areas like export promotion, infrastructure development, modernization, and employment generation, with a special emphasis on empowering MSMEs. With these measures, India is poised to strengthen its position as a global leader in the textile and apparel industry.