The Centre has proposed a five-part integrated programme, with Rs 1,500 crore allocation designed to boost self-reliance in fibres, upgrade manufacturing ecosystems and strengthen traditional crafts
Placing the labour-intensive textile sector at the heart of its employment and export strategy, the Union Budget 2026-27 has unveiled an integrated policy framework that spans the entire value chain, from fibre production and cluster modernisation to sustainability, skilling and global market access. Moving beyond fragmented schemes, the government has proposed a five-part integrated programme, with an allocation of Rs 1,500 crore designed to boost self-reliance in fibres, upgrade manufacturing ecosystems, strengthen traditional crafts and align the industry with emerging green and technical textile opportunities.
In parallel, the Budget tackles two of the sector’s long-standing pain points, infrastructure gaps and working capital stress. New Mega Textile Parks, an expanded export obligation window, and deep reforms in the Trade Receivables Discounting System (TReDS) aim to improve scale efficiencies, ease liquidity constraints for MSMEs and enhance India’s competitiveness in global textile and apparel trade.
The ministry of textiles has received an allocation of Rs 5279.01 crore in this year’s Union Budget, much lower than Rs 5766.68 crore revised allocation last year. The allocation for Textiles Focused Research, Assessment, Monitoring and Promotion Scheme (Tex-Ramps) has doubled from Rs 25 crore in last year’s budget to Rs 50 crore this time around
“The government’s push towards modernising traditional clusters, setting up mega textile parks, supporting technology upgradation and strengthening skilling through initiatives like Samarth 2.0 will significantly enhance India’s competitiveness as a global manufacturing hub. The extension of export timelines and improved infrastructure will also ease supply chain challenges for organised apparel brands,” stated Shivendra Nigam, Chief Financial Officer (CFO), Cantabil Retail India.
Integrated Programme For The Sector
To enhance competitiveness, self-reliance and employment, the Government has proposed an integrated programme for the textile sector. The finance minister has proposed a National Fibre Scheme. Aimed at achieving self-reliance across the fibre spectrum, the scheme will support natural fibres such as silk, wool and jute, man-made fibres and new-age fibres. This initiative will strengthen domestic fibre availability, reduce import dependence and support innovation in advanced textile materials.
“The scheme focused on self-reliance in natural fibres as well as man-made and special-use fibres, is an important step toward securing reliable raw material supplies and reducing import dependency. Complementing this, the Mission for Cotton Productivity aims to raise yields, promote extra-long staple varieties, and deliver science and technology support to farmers, which will improve farm incomes and provide steadier, higher-quality cotton for industry use,” noted Santosh Katariya, President, Clothing Manufacturers Association of India (CMAI).
The textile expansion and employment scheme component focuses on modernisation of traditional textile clusters through capital support for machinery, technology upgradation and establishment of common testing and certification centres. The scheme is expected to enhance productivity, quality compliance and large-scale employment generation, the Centre added.
“The focus on fibre security in natural, man-made, and new fibres tackles the existing challenge in the industry regarding input volatility and quality, which is essential for capacity planning and export competitiveness. On the other hand, the call for the modernisation of the traditional textile sector through technology upgradation, joint testing facilities, and certification assistance will ensure that the gap between the country’s manufacturing capabilities and new global standards is bridged,” highlighted Suketu Shah, Chief Executive Officer (CEO), Vishal Fabrics.
Textile Eco Initiative
Sustainability and global standards receive necessary attention through the Textile Eco Initiative, which aims to build world-class, environmentally sustainable textiles and garments. The initiative aims to promote globally competitive, environmentally sustainable textiles and apparel manufacturing, aligning the Indian textile industry with international sustainability standards and emerging green market opportunities.
“The focus on export enablement, duty rationalisation for leather and synthetic goods and the removal of the courier export value cap will significantly benefit brands and manufacturers looking to scale internationally. The integrated approach towards fibres, skilling, cluster modernisation, sustainability, and technical textiles reflects a long-term vision that supports both innovation and employment,” highlighted Siddharth Dungarwal, Founder, Snitch.
This, along with the planned establishment of new mega textile parks in mission mode, will attract investment, improve compliance and traceability and create integrated hubs for scale, quality control and exports.
“The new text-Eco initiative and modernization schemes directly address the industry’s need for better technology and global competitiveness. Furthermore, programs like Samarth 2.0 and the Mahatma Gandhi Gram Swaraj Initiative will empower our artisans, linking traditional crafts with global markets,” stated Sidhant Keshwani, Founder and CEO, Libas.
The upgraded skilling programme (Samarth 2.0) will modernise the textile skill ecosystem through deeper collaboration with industry and academic institutions, ensuring availability of industry-ready skilled manpower across the value chain
Mahatma Gandhi Gram Swaraj Initiative
To strengthen khadi, handloom and handicrafts, the Mahatma Gandhi Gram Swaraj Initiative will be introduced. The initiative will focus on global market linkage, branding, streamlined training, skilling, quality improvement and process modernisation. It will benefit weavers, village industries, rural youth and support the One District One Product (ODOP) initiative.
“Securing inputs in natural fibres through the national fibre scheme will help derisk exports from disruptions in global supply chains. The Textile expansion and employment scheme will help improve the competitiveness of the sector to cater to new opportunities enabled by trade agreements with the European Union, UK and other countries,” pointed out Anand Ramanathan, Partner & Consumer Industry Leader, Deloitte India.
In a major boost to exports of textiles, leather and marine products, the Budget has notified the extension of the export obligation period from six months to 12 months for exporters of textile garments, leather garments, leather or synthetic footwear and other leather products manufactured using duty-free imported inputs. This measure will provide greater operational flexibility, ease of compliance and improved working capital management for exporters.
To further strengthen liquidity access for textile MSMEs, the Government has announced key measures to enhance the effectiveness of the Trade Receivables Discounting System (TReDS), under which over Rs 7 lakh crore has already been facilitated. A dedicated Rs 10,000 crore small and medium enterprises (SME) Growth Fund has been introduced to create future Champions, incentivizing enterprises based on select criteria
By linking fibre security, cluster modernisation, green manufacturing, skilling and liquidity reforms, the government is attempting to future-proof a sector that supports millions of livelihoods yet faces rising global compliance, cost and scale pressures. The real test, however, will lie in execution speed, coordination between Centre and states, and the ability of small businesses and traditional clusters to absorb technology and sustainability upgrades.
