Budget 2025: Key Announcements for India’s Textile Sector
The Union Finance Minister presented the Budget 2025-26 on February 1, 2025, announcing key measures to boost India’s textile industry. The Ministry of Textiles received an allocation of Rs. 5272 crore, marking a 19% increase from the previous year’s budget of Rs. 4417.03 crore. Several new initiatives, including a five-year Cotton Mission, customs duty reductions, and export-friendly policies, aim to strengthen the sector.
Five-Year Cotton Mission to Boost Productivity
To address stagnation in cotton productivity, the government introduced a five-year Cotton Mission focusing on extra-long staple cotton varieties. This initiative will provide Science & Technology support to farmers, helping them increase yield and improve fiber quality. The mission aligns with the 5F principle (Farm to Fiber to Fabric to Fashion to Foreign) and is expected to:
- Increase farmers’ income
- Ensure a steady supply of high-quality cotton
- Reduce dependence on imports
- Improve India’s global competitiveness in textiles, where 80% of capacity is driven by MSMEs
Support for Technical Textiles: Duty-Free Shuttle-Less Looms
To encourage domestic production of technical textiles such as agro-textiles, medical textiles, and geo-textiles, the government fully exempted two more types of shuttle-less looms from customs duty:
- Rapier Looms (below 650 meters per minute)
- Air Jet Looms (below 1000 meters per minute)
Previously, these looms attracted a 7.5% duty, but with this exemption, textile manufacturers can import advanced looms at a lower cost, aiding modernization and capacity expansion. This move supports the Make in India initiative and strengthens domestic manufacturing.
Customs Duty Adjustment on Knitted Fabrics
The Basic Customs Duty (BCD) rate on knitted fabrics under nine tariff lines has been increased from 10% or 20% to 20% or Rs. 115 per kg, whichever is higher. This adjustment will:
- Improve the competitiveness of Indian knitted fabric manufacturers
- Prevent cheap imports from undercutting domestic producers
- Strengthen the local textile supply chain
Facilitating Handicraft Exports
The budget introduced reforms to boost handicraft exports, including:
- Extended export timelines: Export time extended from six months to one year, with an option for a further three-month extension.
- Duty-Free Raw Material Expansion: Nine new items added to the list of duty-free inputs, including:
- Wool polish materials
- Sea shells
- Mother of Pearl (MOP)
- Cattle horn
These measures will help artisans and exporters by reducing costs and simplifying regulations, making Indian handicrafts more competitive in the global market.
Support for MSMEs & Employment Growth
Since 80% of India’s textile industry is driven by MSMEs, the budget also announced broader initiatives to support small businesses, including:
- National Manufacturing Mission to enhance production efficiency
- Export Promotion Mission to support overseas sales
- Bharat Trade Net for smoother trade transactions
- Fund of Funds to provide financial assistance to MSMEs
- Labour-Intensive Sector Measures to boost employment
- Revised MSME Classification Criteria for better support
Conclusion
The Budget 2025-26 provides strong financial backing and policy support to India’s textile industry, encouraging modernization, higher productivity, and export growth. The combination of increased investment, reduced import duties, and new trade-friendly policies is set to strengthen India’s position as a global textile powerhouse.
With the government’s proactive approach, the industry can expect better growth opportunities, increased competitiveness, and enhanced job creation, especially within the MSME sector.
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