The Union Budget 2026–27 has announced a major push for the employment-intensive textile sector, recognising its critical role in job creation, exports, rural livelihoods and sustainable manufacturing.
Presenting the Budget, Finance Minister Nirmala Sitharaman said the government aims to enhance competitiveness, self-reliance and employment generation in the textile sector through an Integrated Programme for the Textile Sector. The programme seeks to provide end-to-end support across raw materials, manufacturing, skilling, sustainability and exports.
As part of the initiative, the National Fibre Scheme will be launched to achieve self-reliance across the fibre spectrum, covering natural fibres such as silk, wool and jute, man-made fibres and new-age fibres. The scheme is expected to strengthen domestic fibre availability, reduce import dependence and promote innovation in advanced textile materials.
The Budget also proposes a Textile Expansion and Employment Scheme focused on modernising traditional textile clusters through capital support for machinery, technology upgradation and the establishment of common testing and certification centres. This initiative is expected to improve productivity, ensure quality compliance and generate large-scale employment.
To support artisans and preserve India’s rich textile heritage, existing handloom and handicraft schemes will be integrated under a strengthened National Handloom and Handicraft Programme. The move aims to ensure targeted support, improve incomes of weavers and artisans and enhance the effectiveness of government interventions.
In line with global sustainability trends, the Tex-Eco Initiative has been announced to promote environmentally sustainable and globally competitive textile and apparel manufacturing. The initiative will align the Indian textile industry with international sustainability standards and emerging green market opportunities.
The upgraded Samarth 2.0 programme will modernise the textile skilling ecosystem through deeper collaboration with industry and academic institutions, ensuring the availability of industry-ready skilled manpower across the textile value chain.
The Budget also announced the setting up of Mega Textile Parks in challenge mode, with a focus on integrated infrastructure, scale efficiencies and value addition. These parks will support the growth of technical textiles, a high-potential segment with applications in industry, healthcare, defence and infrastructure.
To strengthen khadi, handloom and handicrafts, the government will launch the Mahatma Gandhi Gram Swaraj Initiative. The initiative will focus on global market linkages, branding, training, skilling, quality improvement and process modernisation, while supporting rural livelihoods and the One District One Product initiative.
In a major boost to exports, the Budget has extended the export obligation period from six months to 12 months for exporters of textile garments, leather garments, footwear and other leather products manufactured using duty-free imported inputs. The measure is expected to provide greater operational flexibility, ease of compliance and improved working capital management for exporters.
Liquidity support for textile MSMEs has also been strengthened through enhanced measures under the Trade Receivables Discounting System. The government has announced mandatory use of TReDS by CPSEs for MSME procurement, credit guarantee support for invoice discounting, integration of GeM with TReDS and the introduction of TReDS receivables as asset-backed securities to deepen secondary markets.
To nurture high-growth enterprises, a dedicated ₹10,000 crore SME Growth Fund has been introduced to create future “Champion SMEs”, incentivising enterprises based on select performance criteria while supporting micro enterprises.
