Union Budget 2025-26: A Boost for Textiles
The Union Budget for 2025-26 was unveiled by the Union Finance Minister on February 1, 2025. This year’s budget has significant implications for the textile industry, with a proposed outlay of Rs. 5,272 crores for the Ministry of Textiles. This marks a 19% increase from the previous year’s budget of Rs. 4,417.03 crores. The budget aims to address various challenges facing the sector, particularly stagnant cotton productivity and the need for modernization in textile manufacturing.
Cotton Mission: Enhancing Productivity
One of the standout initiatives in the Union Budget 2025-26 is the introduction of a five-year Cotton Mission. This mission aims to boost cotton productivity, especially for extra-long staple varieties. The government recognizes that stagnant productivity has been a significant hurdle for farmers. To combat this, the Cotton Mission will provide science and technology support to farmers.
This initiative aligns with the “5 F” principle, which focuses on farm-to-fabric processes. By increasing cotton productivity, the mission aims to enhance farmers’ incomes while ensuring a steady supply of quality cotton. This is crucial for the textile sector, where 80% of the capacity is driven by Micro, Small, and Medium Enterprises (MSMEs). By improving domestic productivity, the Cotton Mission will help stabilize raw material availability, reduce dependence on imports, and enhance India’s global competitiveness in textiles.
Promoting Technical Textiles
The budget also emphasizes the promotion of domestic production of technical textile products. These include agro-textiles, medical textiles, and geo-textiles. To facilitate this, the government has introduced significant changes in the import duties on shuttle-less looms. The duty on shuttle-less loom rapier looms (below 650 meters per minute) and air jet looms (below 1000 meters per minute) has been reduced to zero from the previous 7.5%.
This reduction will lower the cost of high-quality imported looms, enabling modernization and capacity enhancement in the weaving sector. The initiative supports the “Make in India” campaign, particularly in the technical textile sector. By making these advanced looms more accessible, the government aims to foster innovation and competitiveness in the industry. This move is expected to stimulate growth in sectors that rely heavily on technical textiles, thereby creating more job opportunities.
Enhancing Export Opportunities for Handicrafts
Another significant announcement in the budget is the extension of the export time period for handicrafts. The time frame has been increased from six months to one year, with the possibility of extending it by an additional three months if necessary. This change is designed to benefit handicraft exports significantly.
Moreover, the budget has expanded the list of items eligible for duty-free raw material imports meant for export production. Nine new items, including wool polish materials, sea shells, and mother of pearl, have been added to this list. This will provide artisans and manufacturers in the handicraft sector with better access to essential materials, thereby enhancing their production capabilities.
Support for MSMEs in the Textile Sector
The textile sector in India is predominantly composed of MSMEs, which account for about 80% of the industry. The Union Budget 2025-26 places a strong emphasis on uplifting these enterprises. The budget includes provisions for enhanced credit, export promotion, and the creation of a conducive environment for MSMEs.
Other notable announcements include the establishment of a National Manufacturing Mission and an Export Promotion Mission. The government also plans to create the Bharat Trade Net and a Fund of Funds to support labor-intensive sectors. These initiatives aim to promote employment and entrepreneurship opportunities within the textile industry. Additionally, revisions in the classification criteria for MSMEs will further support their growth and sustainability.
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