The domestic textiles and apparel sector has welcomed the measures announced by the Union Finance Minister, Nirmala Sitharaman, in the Budget 2025. Apart from slackness in the domestic demand market, the industry also faces global challenges, as it is unable to produce textiles and apparel at competitive prices. The reason is not far to seek, as input costs – starting from raw materials like cotton and other specialised fibres and fabrics – are not available at the right price for manufacturing final products.
Over the last few years, India’s cotton productivity has declined significantly. Against a global average of around 750 kg, India’s productivity hovers around 400 kg per hectare. The recent Budget has sought to address this issue by proposing a Mission on Cotton Productivity, modelled on the Cotton Technology Mission, which had significantly helped increase productivity a decade ago.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), has applauded the government for considering the industry’s long-pending demand and announcing the Mission for Cotton Productivity, which he believes will facilitate significant improvements in the productivity and sustainability of cotton farming while promoting extra-long staple (ELS) cotton varieties. “It will not only address the industry’s concern over declining cotton productivity but will also reduce our dependency on imports for specialised varieties of cotton like ELS,” he added.
He has also commended the government’s approach, stating that the Budget aims to create a globally competitive and technology-driven textile sector. Various other government initiatives, such as the revision of tariff items on knitted fabric categories to boost the domestic industry, the exemption of two more shuttleless looms from basic customs duty to support the technical textile industry, and the establishment of the Export Promotion Mission, will accelerate the sector’s growth towards a $350-billion market size by 2030.
“It is heartening to note that the government has a special focus on MSMEs, which account for more than 45 per cent of our exports. The Indian textiles and apparel industry is largely MSME-driven. The enhanced credit availability with guaranteed cover for MSMEs will undoubtedly boost their confidence. However, the textile industry has been requesting a mix of an upfront capital subsidy and a performance-based incentive scheme, especially for MSMEs, and such a scheme is needed to achieve the targeted growth in this sector,” states Mehra.
The introduction of a new tax regime is expected to increase disposable income, thereby enhancing domestic consumption of textiles and apparel. The CITI chief believes that higher purchasing power will drive demand across various textile segments, benefiting both small and large industry players. CITI remains optimistic that import-related relaxations, particularly the extended timelines for end-use compliance, will also be extended to products covered under Quality Control Orders (QCOs). This will help streamline supply chains and improve operational efficiency within the textile value chain.
The MSME thrust
“The announcement of Rs600 crore to improve the productivity and sustainability of cotton, promote ELS cotton, and bring the best of science and technology to cotton farmers in a mission-mode approach – emphasising high-yielding seeds in alignment with the 5F Vision of the Hon’ble Prime Minister – is a step in the right direction,” says SK Sundararaman, Chairman of the Southern India Mills’ Association (SIMA).
The SIMA chief believes that the predominantly MSME nature of the textile industry will benefit from the upward revision of the MSME sales turnover criteria – doubling the investment limit by 2.5 times – making more enterprises eligible to take advantage of the various fiscal and non-fiscal supports extended to MSMEs. He added that the levy of 20 per cent import duty or Rs115 per kg, whichever is higher, on knitted fabrics would curb cheaper imports from China and other countries while increasing demand for domestically produced fibres, yarns, and fabrics. He also welcomed the extension of customs duty exemptions on shuttleless looms, knitting, non-woven, and garmenting machines, including their parts, spares, and accessories, until 31 March 2027, from the previous deadline of 31 March 2025.
Sundararaman has also welcomed the Export Promotion Mission, which facilitates easy access to export credit, cross-border factoring support, and assistance in addressing non-tariff measures such as sustainability and climate certifications – initiatives that would greatly benefit MSMEs in particular. He has further applauded various other announcements related to the credit guarantee scheme for MSMEs, the new mechanism for ensuring the continuation of bank credit to MSMEs during periods of financial stress, skill development initiatives, and infrastructure development schemes, including those for maritime,
non-conventional energy, and the power sector.
Commenting on the Union Budget, Rajeev Gupta, CEO of RSWM Ltd, stated that the Budget introduces key reforms to promote the domestic production of technical textile products such as agro-textiles, geo-textiles, and medical textiles at competitive prices. The inclusion of two more shuttleless looms in the list of fully-exempted textile machinery is a progressive step towards expanding production capacity in textile manufacturing.
“The government’s emphasis on Atmanirbharta through increased indigenous textile production aligns well with the proposed revision of the basic customs duty rate on knitted fabrics across nine tariff lines –from 10 per cent or 20 per cent to 20 per cent or Rs104 per kg, whichever is higher. The government’s commitment to providing technical and R&D support for cotton farmers under the five-year mission is a welcome move. This initiative is expected to improve cotton farming efficiency and
promote diverse cotton varieties,” adds Gupta.
“India is suffering from a very low yield of cotton (436 kg per hectare), much below even the world average (750 kg per hectare). A much-needed Mission for Cotton Productivity has been announced in the Budget. The five-year mission will increase productivity and sustainability in
cotton farming. Emphasis on growing ELS cotton is another positive announcement. This will help make India self-sufficient in superfine, high-quality fabrics, as at present, such cotton is imported,” says G.V. Aras, Independent Director and Strategic Advisor.
Long-term initiatives
Sanjay Jain, Group CEO of PDS Ltd, has commended the government’s focus on national manufacturing for small, medium, and large industries, aligning with India’s Make in India and Viksit Bharat programmes. He expressed confidence that the five-year mission to boost ELS cotton productivity would improve raw material quality, support textile exports, and reduce import dependency. “We hope that the new reforms towards boosting national manufacturing highlight India’s capabilities as an international manufacturing hub. At PDS, we are equally committed to the Make in India initiative and advancing the future of sustainable manufacturing,” states Jain.
“India has long been a global textile hub, and this Budget takes a positive step towards driving long-term growth in the industry. With the government’s focus on strengthening domestic manufacturing, the proposed Cotton Technology Mission will improve yield quality and the availability of cotton, including long-staple cotton, which is a very positive step. With cotton-based products forming a significant part of Sutlej Textiles’ portfolio, this initiative will enhance quality, efficiency, and sustainability in our operations. These measures will not only benefit manufacturers but also boost exports and reinforce India’s leadership in the global textile market,” says SK Khandelia, Advisor to the Chairman, Sutlej Textiles and Industries.
Sanjay K Jain, Chairman of the ICC National Textiles Committee and Managing Director of TT Ltd, is of the view that the five-year Cotton Mission announced in the Budget to boost productivity and production is a significant boost to the cotton-based industry. Today, India has no surplus in cotton and has one of the lowest yields – 450 kg per hectare – compared to the global average of over 800 kg. Hence, there is a
need for concerted effort. Furthermore, the flat 20 per cent or Rs115/kg import duty, whichever is higher, imposed on all knitted fabric HS codes means no scope for leakages. Any fabric below Rs575/kg would attract an import duty of Rs115/kg, thereby preventing the entry of undervalued fabrics into the country – a positive development for the local MMF-based industry.
“The Cotton Productivity Mission is a vital initiative to improve India’s cotton yield from the current 450-500 kg per hectare to 1,000 kg per hectare. This five-year, time-bound mission, driven by advanced technology and scientific support, aims to boost farmers’ incomes and ensure raw material security for the Indian textile and apparel sector. Moreover, revisions in income tax slabs and exemptions are a positive step to boost consumption and economic growth. These measures, along with potential RBI rate cuts, will strengthen spending power and further drive demand,” avers Prabhu Dhamodharan, Convenor of the Indian Texpreneurs Federation (ITF), Coimbatore.
Santosh Katariya, President of the Clothing Manufacturers Association of India (CMAI), feels that the Cotton Mission and MSME-focused reforms are key positives for the textile industry. He notes that raising investment and turnover limits for MSMEs and reducing customs duty on textile machinery would strengthen manufacturing. On the consumption side, income tax relief and TDS/TCS revisions are expected to increase disposable income, boosting demand for textiles and apparel. However, he cautions that any increase in GST rates could offset these benefits.