India Budget 2025-26: Textile industry may get tariff cuts, more funds



India Budget 2025-26: Textile industry may get tariff cuts, more funds

India’s Finance Minister Nirmala Sitharaman will present Union Budget for next fiscal 2025-26 on February 1 in Parliament in New Delhi. The country’s textile industry is looking for handhold support amid the challenging market conditions. It is likely that the finance minister will take a call on tariff adjustments to align with present situation of the industry. She may also incentivise textile and garment production in the country by policy intervention and higher fund allocations. It is highly expected that the Indian government will support the industry by allocating more fund for the Ministry of Textiles for various schemes.

While the present situation in Bangladesh provides an opportunity to increase India’s export share, the country’s textile industry is struggling hard to attract large export orders due to limits of production capacity. Secondly, domestic industry is facing several odds in terms of higher cost of production due to costlier raw materials like fibre, yarn and fabric. These challenges may force the finance minister to think on various options.

India’s textile industry anticipates key policy support in the upcoming Union Budget, including tariff adjustments and increased funding.
With rising production costs and limited export capacity, the sector seeks eased PLI scheme restrictions and higher allocations.
Expected measures include lower import duties on polyester, viscose, and textile machinery to enhance competitiveness.

After lukewarm response, production linked incentive (PLI) scheme is gradually taking space in textile industry. However, the scheme is yet to take off in a full-fledged manner due to several restrictions. Industry organisations are demanding removal of restrictions to harness the schemes full potential. Therefore, the government may ease conditions of PLI scheme with higher allocations. The government may raise the allocation for PLI scheme for the textile sector to ₹60 crore from ₹45 crore for the current fiscal, official sources indicated.

The government may cut tariff on raw materials such as polyester and viscose staple fibre. The import duty may also get an ease in imports of textile machinery. Import tariffs are currently in the range of 11-27 per cent on fibre, compared to almost zero duty in Bangladesh. The government may also adjust duty on fabric imports. Industry is raising concerns of flooding of knitted synthetic fabric from China by misdeclarations. Duty adjustment may balance the interests of upstream and downstream value chain of the textile industry.

Fibre2Fashion News Desk (KUL)




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