The textile industry is in the spotlight after the Union Budget 2026-27, which Nirmala Sitharaman delivered today. From employment strategy to skilling and factory expansions, here is what Sitharaman and co. have allocated for the industry.
“India’s tariff-impacted textile sector and its entire value chain have received support from an array of schemes. The proposed establishment of textile megaparks, coupled with initiatives such as the National Fibre Scheme, Textile Expansion Employment Scheme, Tex Echo Initiative, Samarth 2.0, and the Mahatma Gandhi Gram Swaraj Initiative, should enhance its global competitiveness. This, complemented by free trade agreements, will expand market access for domestic textile makers,” a Crisil spokesperson said.
Integrated programme to anchor sector overhaul
An Integrated Programme for the Textile Sector, comprising of five sub-components, has been proposed.
A National Fibre Scheme will focus on achieving self-reliance across natural fibres such as silk, wool and jute, as well as man-made and new-age fibres. According to Sitharaman, the scheme is expected to strengthen domestic fibre availability, reduce import dependence and support innovation in advanced textile materials.
The Textile Expansion and Employment Scheme will support modernisation of traditional textile clusters through capital assistance for machinery, technology upgrades and the creation of common testing and certification centres. The government expects the scheme to improve productivity, quality compliance and employment generation at scale.
According to the budget, existing handloom and handicraft schemes will be consolidated under a unified National Handloom and Handicraft Programme. This, as per Sitharaman, will improve the income and preserve traditional textile clusters.
Sustainability has been addressed through the Tex-Eco Initiative, which seeks to promote environmentally sustainable and globally competitive textile and apparel manufacturing.
On the skills front, Samarth 2.0 will modernise the textile skilling ecosystem through closer collaboration with industry and academic institutions, with the aim of creating industry-ready manpower across the value chain.
Mega textile parks, technical textiles get boost
According to the Budget 2026-27, setting up Mega Textile Parks in challenge mode has been proposed.
These parks will also support the growth of technical textiles, a segment seen as critical for industrial, medical, defence and infrastructure applications.
Khadi, handloom and rural branding push
A new Mahatma Gandhi Gram Swaraj Initiative will be launched to strengthen khadi, handloom and handicrafts through global market linkages, branding, quality improvement and process modernisation.
The initiative will benefit weavers, village industries and rural youth, and will align with the One District One Product programme.
Export relief extended to textiles, leather and footwear
The Budget has extended the export obligation period from six months to 12 months for exporters of textile garments, leather garments, leather and synthetic footwear, and other leather products manufactured using duty-free imported inputs.
Liquidity push for textile MSMEs via TReDS
The government has further announced a set of measures to strengthen the Trade Receivables Discounting System (TReDS), under which over Rs 7 lakh crore has already been facilitated, the budget added.
These include mandatory use of TReDS by central public sector enterprises for MSME procurement, credit guarantee support through CGTMSE for invoice discounting, and linking the Government e-Marketplace (GeM) with TReDS to enable faster financing of government receivables. The Budget has also proposed introducing TReDS receivables as asset-backed securities to deepen secondary markets and enhance liquidity.
Rs 10,000-crore fund to create ‘champion’ SMEs
The Budget has also announced a dedicated Rs 10,000 crore SME Growth Fund aimed at creating future “Champion SMEs”, with incentives linked to select performance and growth criteria. The fund is intended to support scaling enterprises while strengthening micro enterprises across manufacturing value chains, including textiles.