Indian Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025 to Parliament, marking a significant moment for the textile sector with several key initiatives aimed at boosting productivity and global competitiveness. Industry reactions have largely been positive, highlighting the potential long-term benefits of the policies laid out during her address.
The announcement of the 'Mission for Cotton Productivity' has garnered considerable attention from industry leaders. This 5-year initiative aims to significantly improve cotton farming's productivity and sustainability, particularly through the promotion of extra-long staple (ELS) cotton varieties. Finance Minister Sitharaman stated, "Aligned with our integrated 5F vision for the textile sector, this will help increase incomes for the farmers, ensuring a steady supply of quality cotton to rejuvenate India’s traditional textile sector." This commitment to cotton productivity is seen as pivotal, especially since India is the world’s second-largest producer of cotton.
Santosh Katariya, President of the Clothing Manufacturers Association of India (CMAI), acknowledged the benefits but noted there hadn’t been any major direct gains for the textile industry from the Budget. Nevertheless, he believes the Cotton Mission and measures aimed at the micro, small, and medium enterprises (MSMEs) can help spur growth. The reduction of basic customs duties on specific textile machinery is also expected to stimulate the economy by encouraging production and reducing costs.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), welcomed the Budget’s increased allocation of US $ 132 million (Rs. 1,148 crore) under the Production-Linked Incentive (PLI) scheme, marking a 57.7 percent increment compared to the previous year. This infusion of funds aims to support initiatives focusing on import substitution and technology enhancement.
Industry experts are particularly optimistic about the revisions to the Basic Customs Duty (BCD) on knitted fabrics. The new rate will be set at 20 percent or Rs. 115 per kg, whichever is higher, effective from February 2, 2025. This modification is anticipated to protect domestic manufacturers from cheaper imports, which have been undermining the market.
Dr. S.K. Sundararaman, Chairman of the Southern India Mills Association (SIMA), mentioned the global competitiveness of the textile industry will be enhanced as these adjustments are likely to deter under-invoicing of imports. Sanjay K Jain, Chairman of the ICC National Textile Committee, echoed this sentiment, noting the swift flow of incentive funds triggered by the budget's changes.
Furthering this positive outlook, Sudhir Sekhri, Chairman of the Apparel Export Promotion Council (AEPC), expressed confidence about the government’s commitment to facilitating export-led growth. He emphasized the budget’s focus on innovation, sector-wide competitiveness, and employment generation as foundational elements for sustainable growth.
Prabhu Dhamodharan, Convenor of the Indian Texpreneurs Federation (ITF), hailed the Cotton Productivity Mission as revolutionary, aiming to increase India’s yield to 1,000 kg per hectare from the current levels of 450-500 kg. This ambitious target aligns with broader economic measures reflected within the budget, including income tax modifications intended to boost consumer spending.
Rajeev Gupta, CEO of RSWM Ltd, expressed contentment with the proposed supports for technical textile production, which plays increasingly pivotal roles within the sector. He remarked, “The credit guarantee cover for MSMEs and the emphasis on skilling through National Centres of Excellence will help maintain momentum.”
The decision to increase the credit limit for the Kisan Credit Card to Rs. 5 lakh is another reflection of the government's intent to empower farmers and support the textile industry reliant on agricultural raw materials.
On the stock market front, shares of homegrown textile companies experienced notable surges following the announcements, with Ambika Cotton Mills seeing its stock rise nearly 10 percent. Other stocks also reflected optimism within the sector, demonstrating the immediate market response to the budget’s provisions.
Kumar Rajagopalan, CEO of the Retailers Association of India, highlighted significant long-term benefits for retail, attributing them to the enhanced income tax exemptions for consumers and other such support measures targeting gig workers. "This creates more disposable income, which means greater spending power for retail purchases, particularly clothing and home textiles," he mentioned.
While optimism surrounds these initiatives, some industry leaders suggest the government should introduce mixed incentives combining upfront capital subsidies and performance-based schemes to solidify gains within the MSME sector. There is consensus among stakeholders about the need for these measures to convert short-term advantages from the budget announcement to sustainable, long-term growth.
Several participants from the textile sector are keeping close tabs on the developments stemming from the 2025 Union Budget as they anticipate its effects on domestic production capacities. The integration of cutting-edge technology backed by increased investment commitments across various textile segments paints an encouraging picture for the future.
Overall, the Union Budget 2025 presents key opportunities for India’s textile sector, offering pathways for enhanced production, sustainability, and competitiveness on the global stage. The positive reception from industry figures reflects the collective hope for revitalization within the textile economy, particularly against the backdrop of increasing international demand and operational efficiencies.