From Fibre to Fashion: Budget FY27 charts new roadmap for textile industry
NEW DELHI: The 2026–27 Budget underlines a major policy push for the labour-intensive textile sector, underlining its importance in employment generation, exports, rural livelihoods and sustainable manufacturing.
The government has unveiled a comprehensive and integrated framework aimed at strengthening the entire textile value chain—from fibre production to finished apparel, and from village-based industries to global markets.
At the core of the announcement is a proposed Integrated Programme for the Textile Sector, designed to enhance competitiveness, self-reliance and large-scale job creation. The programme comprises five key components. The National Fibre Scheme will focus on achieving self-reliance across the fibre spectrum, covering natural fibres such as silk, wool and jute, man-made fibres and emerging new-age fibres.
The initiative is expected to strengthen domestic fibre availability, reduce import dependence and promote innovation in advanced textile materials.
The Textile Expansion and Employment Scheme aims to modernise traditional textile clusters by providing capital support for machinery, technology upgradation and the creation of common testing and certification facilities. This, the government said, will help improve productivity, ensure quality compliance and generate employment at scale.
Existing schemes for handloom and handicrafts will be brought together under a unified National Handloom and Handicraft Programme, with the objective of providing more targeted support to weavers and artisans, boosting incomes and preserving India’s textile heritage. To align the industry with global sustainability norms, the Tex-Eco Initiative will promote environmentally sustainable and globally competitive textile and apparel manufacturing, opening up access to emerging green markets.
The Budget has also announced Samarth 2.0, an upgraded skilling programme that will strengthen the textile skill ecosystem through closer collaboration with industry and academic institutions, ensuring a steady supply of industry-ready manpower.
In addition, the government will set up Mega Textile Parks in challenge mode, focusing on integrated infrastructure, scale efficiencies and value addition. These parks will also support the growth of technical textiles, a high-potential segment catering to industrial, medical, defence and infrastructure needs.
To strengthen khadi, handloom and handicrafts, the Budget proposes the launch of the Mahatma Gandhi Gram Swaraj Initiative. The initiative will focus on global market linkages, branding, streamlined training, quality improvement and process modernisation, benefiting weavers, village industries and rural youth, while supporting the One District One Product initiative.
On the export front, the Budget has provided relief to exporters of textiles, leather and marine products by extending the export obligation period from six months to 12 months for goods manufactured using duty-free imported inputs.
The move is expected to ease compliance, improve working capital management and provide greater operational flexibility.
Liquidity support for textile MSMEs has also been strengthened through measures to enhance the Trade Receivables Discounting System (TReDS), under which transactions worth over Rs 7 lakh crore have already been facilitated.
The Budget mandates the use of TReDS by CPSEs for MSME procurement, extends CGTMSE credit guarantee support for invoice discounting, links GeM with TReDS, and introduces TReDS receivables as asset-backed securities to deepen secondary markets.
Further, a dedicated Rs 10,000 crore SME Growth Fund has been announced to create future “Champion SMEs”, incentivising enterprises based on select performance criteria.
