New Delhi: The Union budget for FY27 placed the textile sector at the centre of its manufacturing strategy for labour-intensive sectors, unveiling an integrated programme to boost exports, modernize clusters and strengthen India’s position in the global apparel and technical textile markets.
Presenting the budget in Parliament on Sunday, finance minister Nirmala Sitharaman announced a five-part integrated textile programme covering fibre security, technology and machinery upgrade, technical textiles, handlooms and handicraft, sustainable production and skilling, alongside plans to set up mission-mode Mega Textile Parks through a challenge-based approach.
One of the key announcements made by the finance minister was the launch of the Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom and handicrafts.
“This will help in global market linkage and branding. It will streamline and support training, skilling, quality of processes and production,” Sitharaman said, outlining government’s blueprint to position the sector as a global sourcing hub. “This will benefit our weavers, village industries, the ‘one district–one product’ initiative and rural youth.”
The proposed National Fibre Scheme seeks to reduce import dependence by promoting natural fibres such as cotton, silk, wool and jute, along with man-made and new-age fibres, to ensure supply stability and price competitiveness. This will be complemented by the Textile Expansion and Employment Scheme that will provide capital support for machinery modernization, technology upgrade and common testing facilities in traditional textile clusters.
The budget also announced ‘Samarth 2.0’ to modernize the textile skilling ecosystem through partnerships with industry and academic institutions.
The textile sector is crucial as a major foreign exchange earner and employment generator for India. The country exported textile and apparel exports worth $36.60 billion in FY25, underscoring the sector’s importance as a foreign exchange earner and major employment generator.
The announcements for the labour-intensive sector assume significance at a time when geopolitical shifts are reshaping global supply chains. The industry is among the country’s second largest employers after agriculture, providing direct employment to over 45 million people. The sector also supports millions of additional jobs across allied activities, with a substantial share of employment concentrated among women and rural populations.
“The big-ticket announcements for labour-intensive sectors are being seen as a clear push to strengthen domestic industry and improve global competitiveness, especially at a time when new opportunities are opening up through the free trade agreements India has already signed and those currently under negotiation,” said Abhash Kumar, a trade economist.
“Competitiveness in textiles begins with raw material security and competitive pricing. The budget’s proposal for a National Fibre Mission, covering the full fibre spectrum will help ensure supply stability, price competitiveness and stronger global positioning of India’s finished textile and apparel products,” said Prabhu Dhamodharan, convenor at the Indian Texpreneurs Federation.
Industry experts textile clusters and scale will be critical in determining how effectively India captures opportunities arising from free trade agreements. With clusters forming the backbone of exports, Tamil Nadu, which contributes over 40% of India’s apparel exports, is expected to be a key beneficiary. “The budget’s push for technology upgradation in clusters and mission-mode mega textile parks will enable faster scaling, higher productivity and the creation of globally competitive supply chains,” Dhamodharan said.
In line with the broader manufacturing push outlined in the budget, the sector has been backed by a mix of new initiatives and continued funding support from the textile ministry’s allocations for FY27.
The Budget has provided a total allocation of ₹5,279 crore for the ministry, with a sharp focus on fibre security, cluster development, skilling and value addition across the textile value chain. The allocation is marginally lower than the revised estimate of ₹5,766.68 crore for FY26, and broadly in line with the budget estimate of ₹5,272 crore for FY26.
A key highlight is the Integrated Textile Programme, which has been allocated ₹1,500 crore and brings together five sub-components: the National Fibre Mission, Textile Expansion and Employment Scheme, Tex-Eco Mission for sustainable textiles, Samarth 2.0 for skilling, and initiatives focused on handmade textiles and human capital excellence, according to Budget documents reviewed by Mint.
The government has also continued support for large-scale infrastructure through the PM MITRA scheme, with an allocation of ₹300 crore, aimed at creating integrated textile parks and end-to-end manufacturing ecosystems. The allocation for the production linked incentive (PLI) scheme for textiles has been maintained at ₹405 crore, reflecting continued emphasis on man-made fibre apparel, fabrics and technical textiles.
Support for traditional segments such as handlooms, handicraft, jute, silk and wool has also been maintained, alongside higher allocations for skill development and technical textiles.
“The continued focus on Samarth 2.0, Tex-Eco and mega textile parks, particularly with an emphasis on technical textiles, signals strong intent to future-proof the sector,” said Rajeev Gupta, joint managing director of Bhilwara Group yarn manufacturer RSWM Ltd. “With effective implementation, these measures can significantly strengthen India’s position as a globally competitive, sustainable and resilient textile manufacturing hub.”
Rahul Kakkad, tax partner, consumer products and retail sector at EY India, said that the budget firmly positions textiles as a growth and employment engine for India.
“Through initiatives such as the National Fibre Scheme, cluster modernization, Samarth 2.0 skilling, and sustainability-led TEX-ECO, the budget addresses the sector holistically—from raw materials and technology to skills and green manufacturing. Support for khadi and handlooms further strengthens inclusive growth,” he said. “Collectively, these measures are expected to enhance global competitiveness, boost exports, and generate large-scale employment across the textile value chain.”
