By Rohit Kansal
The Union Budget 2026 places the textile sector at the heart of India’s growth, employment and sustainability agenda. The announcement of an Integrated Programme for labour-intensive sectors signals a calibrated shift from incremental, scheme-based interventions to a coordinated strategy aimed at building a future-ready, globally competitive and environmentally responsible textile ecosystem.
Few sectors combine economic scale, employment intensity and cultural depth in the way textiles do in India. One of the country’s oldest and most diverse manufacturing ecosystems, the sector spans natural and man-made fibres, handlooms to large integrated mills, and thousands of micro, small and medium enterprises. It contributes around 2.3 per cent to GDP, supports a domestic and export market of nearly ₹16 lakh crores, accounts for about 4.5 per cent of global apparel trade, and provides livelihoods to nearly 45 million people directly and close to 100 million indirectly across farming, logistics, trade and allied services. With women constituting almost three-quarters of the workforce, textiles remain central to inclusive, regionally balanced and women-led growth.
Clusters, Competitiveness and the Push for Scale
At the same time, the sector’s diversity and decentralised structure present opportunities for productivity enhancement and value addition. A large share of production continues to be anchored in traditional clusters—which account for over three fourths of fabric output. Addressing scale, technology adoption and logistics efficiency in these clusters can unlock significant gains in competitiveness and employment generation, particularly in comparison with large, integrated manufacturing hubs in East and Southeast Asia.
Raw material availability and composition also offer scope for strategic strengthening. While global apparel demand has increasingly shifted towards man-made fibres—now accounting for over 70 per cent of consumption—India’s fibre ecosystem is in the process of diversifying to better align with evolving global market trends. Enhancing domestic capacity in man-made and new-age fibres, alongside India’s traditional strength in natural fibres, can support export growth and reduce import dependence.
From Fibre Security to Sustainable Manufacturing
It is in this context that the Integrated Programme for Textiles announced in the Union Budget 2026 represents a significant step forward. For the first time, a comprehensive, multi-pronged set of interventions has been rolled out simultaneously to strengthen fibre security, manufacturing competitiveness, employment generation, artisanal excellence, skills and sustainability across the value chain.
At the upstream end, the National Fibre Mission seeks to promote self-reliance across natural fibres such as silk, wool and jute, as well as man-made and new-age fibres. By strengthening domestic fibre capacity, the mission aims to align India’s production base with global demand patterns while reinforcing Atmanirbhar Bharat objectives.
At the manufacturing stage, the Textile Expansion and Employment Scheme (TEEM) focuses on modernising traditional clusters through capital support for machinery, technology upgradation and the creation of common testing, certification and design facilities. Given the centrality of clusters to India’s textile ecosystem, productivity improvements through the TEEM along with access to the dedicated ₹10,000 crore SME Growth Fund- another budget announcement- as well increased liquidity through TReDS can create Champion MSMEs besides unlocking broad-based gains in quality, efficiency and employment.
The Mega Textile Parks to be selected through a challenge method are a natural corollary to the PM MITRA Park scheme which has generated investment interest of over ₹50,000 crores so far; the added emphasis on technical textiles will help mobilise investments in a high-potential segment with strategic significance for industrial, medical, defence and infrastructure applications.
Equally important is the continued emphasis on livelihoods, skills and heritage. While Samarth 2.0 will strengthen the skills ecosystem through closer collaboration between industry and academia, the convergence-based National Handloom and Handicrafts Programme, as well as the Mahatma Gandhi Gram Swaraj Initiative to promote khadi, handlooms and handicrafts together reflect a holistic approach to artisanal excellence and sectoral development.
Within this integrated framework, the Tex Eco Initiative emerges as a cornerstone of the sustainability agenda. As the environmental pillar of the programme, it seeks to mainstream resource efficiency, circularity, waste reduction and cleaner production practices across the value chain. By doing so, Tex Eco aligns sustainability objectives with productivity enhancement and long-term competitiveness.
These measures assume added significance in light of India’s expanding network of trade agreements, including with major markets such as the European Union and the United Kingdom. As these agreements unlock new demand through improved market access and preferential terms, the combination of existing initiatives such as PM MITRA, NTTM, PLI scheme and the newly announced Integrated Programme for Textiles offers a natural and timely supply-side response—ensuring that Indian manufacturers are not only able to access new markets, but do so with the scale, quality, sustainability and compliance that global buyers increasingly demand.
Anchored in the national vision of Atmanirbhar Bharat and Viksit Bharat 2047, and guided by the principle of Vikas Bhi, Virasat Bhi, the textile agenda articulated in Union Budget 2026 reflects a broader development narrative—one in which economic growth, job creation and environmental responsibility reinforce each other. The Integrated approach can help shape an ecosystem that is green, global and resilient—while remaining firmly rooted in livelihoods and inclusion.
It is now for the industry to seize the initiative.
The author is currently Additional Secretary in the Ministry of Textiles. The views expressed by the author are personal