Union Budget 2025: Textile Sector Gets ₹5,272 Crore; Focus on MSMEs & Exports

The Union Budget 2025, presented on February 1, 2025, announced significant measures to boost India’s textile sector, which is primarily driven by MSMEs and contributes substantially to the economy.

The Ministry of Textiles received a budget outlay of ₹5,272 crores for 2025-26, marking a 19% increase from the ₹4,417.03 crores allocated in the previous budget.

Cotton Mission: Enhancing Productivity

One of the key initiatives is the launch of a 5-year Cotton Mission aimed at addressing stagnant cotton productivity, particularly for extra-long staple varieties. The Mission emphasises providing Science & Technology support to farmers, in alignment with the 5F principle.

This initiative aims to increase farmers’ income, ensure a steady supply of quality cotton, and reduce reliance on imports. By boosting domestic cotton productivity, the government seeks to stabilize raw material availability and enhance the global competitiveness of India’s textile sector, where MSMEs drive 80% of capacity.

Incentives for Technical Textiles

The Budget introduced measures to promote the domestic production of technical textiles such as agro-textiles, medical textiles, and geo-textiles. Two additional types of shuttle-less looms were added to the list of fully exempted textile machinery.

Duties on Shuttle-less Rapier Looms (below 650 meters per minute) and Air Jet Looms (below 1,000 meters per minute) have been reduced to nil from the previous 7.5%. This reduction will lower the cost of high-quality imported looms, facilitating modernisation and capacity building in the weaving sector. It also aligns with the “Make in India” initiative, boosting the technical textile industry.

Custom Duty Adjustments

The Basic Custom Duty on knitted fabrics, covering nine tariff lines, has been increased from 10% or 20% to 20% or ₹115 per kg, whichever is higher. This measure is aimed at curbing cheap imports and improving the competitiveness of Indian knitted fabric manufacturers.

Boost for Handicrafts and MSMEs

To facilitate handicraft exports, the permissible export period has been extended from six months to one year, with a possible extension of another three months. Additionally, nine items, including wool polish materials and cattle horn, have been added to the list of duty-free raw material imports meant for export production.

Other MSME-focused measures include a National Manufacturing Mission, Export Promotion Mission, Bharat Trade Net, and Fund of Funds. These initiatives are expected to uplift textile MSMEs by promoting employment, entrepreneurship, and a conducive environment for growth.

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