India’s textile and garment industry is set to receive a significant boost in the upcoming budget, with the government planning a multi-pronged approach to enhance its competitiveness on the global stage. This move comes as political instability in neighbouring Bangladesh prompts international retailers to diversify their sourcing strategies, presenting a valuable opportunity for Indian manufacturers.
Government sources indicate that the budget, expected on February 1st, will include financial support, tariff reductions on key inputs, and incentives for local production. This strategic intervention aims to capitalise on the current shift in global apparel sourcing.
Key measures under consideration include:
- Increased Budget Allocation: The Ministry of Textiles is likely to see a 10-15% increase in its budget for 2025/26, rising from the current 44.17 billion rupees ($511 million).
- Boosted Production-Linked Incentives (PLI): The allocation for PLI schemes, which offer tax incentives and concessions for local manufacturing, is expected to increase from 450 million rupees to around 600 million rupees. This incentivizes domestic production and strengthens the industry’s manufacturing base.
- Tariff Cuts on Raw Materials: To level the playing field with competitors like Bangladesh, the government is considering reducing import tariffs on crucial raw materials like polyester and viscose staple fibre, as well as textile machinery. Current tariffs on fibre range from 11-27%, compared to near-zero duties in Bangladesh, creating a significant cost disadvantage for Indian exporters.
The shift in global sourcing is reflected in recent trade figures. Data from the U.S. Office of Textiles and Apparel reveals that Bangladesh’s garment exports to the U.S. experienced a slight dip of 0.46% to $6.7 billion between January and November last year, while India’s exports saw a 4.25% increase to $4.4 billion. This trend is further supported by reports from Dhaka-based factory owners, who confirm that some American buyers are re-routing orders to India and Vietnam due to the ongoing situation in Bangladesh.
India’s textile and garment exports have demonstrated robust growth, increasing by over 7% year-on-year to more than $23 billion in the first eight months of the fiscal year through November. Readymade garment exports have shown even stronger performance, growing by over 11% year-on-year to nearly $10 billion during the same period and are projected to reach $16 billion by the end of March.
With an estimated 45 million people employed in the textile sector, these government initiatives are expected to not only boost exports but also generate further employment opportunities and strengthen the overall Indian economy. The upcoming budget is poised to be a pivotal moment for the Indian textile industry, setting the stage for significant growth and global competitiveness.
