Union Budget 2025-26: A Boon for India's Textile Industry with Increased Allocation, Cotton Mission, and MSME Support

The Union Budget for 2025-26, presented on February 1, 2025, has allocated Rs. 5,272 crores to the Ministry of Textiles, marking a 19% increase from the previous year's budget estimate of Rs. 4,417.03 crores. This allocation reflects the government's focus on addressing key challenges and boosting the textile sector, which is largely driven by MSMEs (80% of the sector).

Key Highlights of the Budget for the Textile Sector:

1. Five-Year Cotton Mission:

• Aimed at addressing stagnant cotton productivity, especially for extra-long staple varieties.
• Science & Technology support will be provided to farmers to enhance productivity.
• Aligns with the 5F principle (Farm to Fibre to Factory to Fashion to Foreign) to increase farmers' income and ensure a steady supply of quality cotton.
• Expected outcomes: Boost domestic productivity, reduce import dependence, and enhance the global competitiveness of India’s textile sector.

2. Promotion of Technical Textiles:

• Two types of shuttle-less looms (Rapier Looms below 650 meters per minute and Air Jet Looms below 1000 meters per minute) have been added to the list of fully exempted textile machinery.
• Custom duty on these looms reduced from 7.5% to nil, reducing the cost of high-quality imported looms.
• This will facilitate modernization and capacity enhancement in the weaving sector and boost Make in India initiatives in technical textiles like agro-textiles, medical textiles, and geo-textiles.

3. Increase in Custom Duty on Knitted Fabrics:

• Basic Custom Duty on knitted fabrics (covered by nine tariff lines) increased from 10% or 20% to 20% or Rs. 115 per kg, whichever is higher.
• This move aims to improve the competitiveness of Indian knitted fabric manufacturers and curb cheap imports.

4. Facilitation of Handicraft Exports:

• The time period for exporting handicrafts has been extended from six months to one year, with a further extension of three months if required.
• Nine new items, including wool polish materials, sea shell, Mother of Pearl (MOP), and cattle horn, have been added to the list of duty-free inputs for export production.

5. Support for MSMEs:

• The budget emphasizes export promotion, enhanced credit, and coverage to uplift textile MSMEs.
• Other initiatives like the National Manufacturing Mission, Export Promotion Mission, Bharat Trade Net, Fund of Funds, and measures for labor-intensive sectors will create a conducive environment for the textile sector.
• Revision in MSME classification criteria will further support small and medium enterprises.

Overall Impact:

• The budget aims to modernize the textile sector, enhance domestic production, and reduce import dependence.
• It focuses on increasing farmers' income, improving global competitiveness, and creating employment and entrepreneurship opportunities.
• The emphasis on technical textiles and handicrafts will diversify the sector and boost exports.

This budget is expected to provide a significant impetus to India’s textile industry, benefiting farmers, MSMEs, and exporters while strengthening the sector's global position.