Budget 2026: Mega Parks and New Schemes to Boost Textiles

Introduction to the Textile Sector Overhaul

In the Union Budget 2026, Finance Minister Nirmala Sitharaman announced a comprehensive set of reforms for India's labour-intensive textile sector. The proposals aim to strengthen the entire value chain, from fibre production to global branding, positioning textiles as a key driver for economic growth and employment. The centerpiece of the announcement includes the establishment of mega textile parks and a new integrated programme designed to enhance scale, efficiency, and competitiveness.

A New Integrated Textile Programme

The government has proposed a major integrated programme that consolidates and strengthens various initiatives under a single framework. This programme consists of five distinct sub-parts, each targeting a specific area of the textile ecosystem.

1. National Fibre Scheme: This initiative focuses on achieving self-reliance in natural fibres like silk, wool, and jute. It also aims to boost the production of man-made and new-age fibres, reducing import dependency and securing raw material supply for the industry.

2. Textile Expansion and Employment Scheme: To modernize manufacturing, this scheme will provide capital support to traditional clusters. The funds are intended for machinery upgrades, technology adoption, and the establishment of common testing and certification centres, which will help improve quality and productivity.

3. National Handloom and Handicraft Programme: This component integrates existing schemes to provide more targeted support to weavers and artisans. The goal is to preserve traditional crafts while improving market access and ensuring better economic returns for the artisans.

4. Text-ECON Initiative: This initiative is designed to promote the manufacturing of globally competitive and sustainable textiles and apparel. It encourages environmentally responsible production practices and helps Indian manufacturers align with international standards.

5. SAMARTH 2.0: An upgraded version of the existing skilling scheme, SAMARTH 2.0 will modernize the textile skilling ecosystem. It will foster collaboration between industry and academic institutions to ensure the workforce is trained for the evolving needs of the sector.

Mega Textile Parks in 'Challenge Mode'

A significant proposal is the establishment of mega textile parks, which will be set up through a 'challenge mode'. This competitive selection process encourages states to submit proposals for winning project funding. These parks are intended to create large-scale, modern industrial infrastructure. A key focus will be on value addition in technical textiles, a high-growth segment with significant export potential. By creating integrated facilities, the government aims to reduce logistics costs, improve efficiency, and attract substantial domestic and foreign investment.

Strengthening Traditional Crafts

To support India's rich heritage of traditional crafts, the Finance Minister announced the 'Mahatma Gandhi Gram Swaraj Initiative'. This scheme is specifically designed to strengthen Khadi, handloom, and handicrafts. It will provide support for global market linkages and branding, helping local products reach international customers. The initiative will also streamline training, skilling, and quality control processes to benefit weavers, village industries, and the 'One District, One Product' (ODOP) initiative.

Political Context and Industry Perspective

The announcement of the Mahatma Gandhi Gram Swaraj Initiative comes shortly after the government's controversial repeal of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The repeal and replacement of the scheme, a flagship program of the previous government, drew criticism from opposition parties who accused the government of attempting to erase the legacy of Mahatma Gandhi. The naming of the new textile scheme after him is seen by some as a move to counter this narrative.

Industry experts have reacted positively to the budget announcements. Shashi Mathews, Partner at CMS INDUSLAW, noted that the proposals for SAMARTH 2.0 and the mega textile parks are welcome moves. He stated that these initiatives will help India compete more effectively with textile manufacturing hubs like Vietnam, Bangladesh, and China, especially when combined with recent trade agreements like the India-EU FTA.

Broader Support for Manufacturing

Beyond textiles, the budget also proposed a scheme to revive 200 legacy industrial clusters across the country, helping them modernize. To further support small businesses, a Rs 4,000 crore top-up to the Self Reliance India Fund was announced for FY27 to boost Micro, Small, and Medium Enterprises (MSMEs).

Conclusion

The Union Budget 2026 has laid out a strategic roadmap for the comprehensive development of the Indian textile sector. By focusing on infrastructure development through mega parks, integrating various support systems, and strengthening traditional crafts, the government aims to create a globally competitive and self-reliant industry. The successful implementation of these schemes will be crucial in generating employment, boosting exports, and preserving India's rich textile heritage.