Budget 2026: Textile Sector Gets Major Boost with New Fibre Schemes, Export Relief

The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, has unveiled a comprehensive, multi-pronged strategy for India's textile sector. The announcements aim to strengthen the entire value chain, from fibre production to final exports, positioning the industry as a key driver for employment and economic growth under the 'Viksit Bharat' vision.

An Integrated Programme for Growth

At the core of the budget's proposals is an integrated programme built on five pillars designed to enhance self-reliance, modernisation, and global competitiveness. This structured approach addresses long-standing challenges and aims to create a resilient ecosystem for both traditional crafts and modern manufacturing.

The five key components of this programme are:

1. National Fibre Scheme: To achieve self-reliance in natural fibres like silk, wool, and jute, while also boosting the production of man-made and technical fibres.
2. Textile Expansion and Employment Scheme: To modernise traditional clusters with capital support for machinery, technology upgrades, and common testing facilities.
3. National Handloom and Handicraft Programme (NHHP): To integrate existing schemes and provide targeted support to weavers and artisans, improving market access.
4. Text-ECON Initiative: To promote innovation, design development, and the adoption of sustainable, eco-friendly practices across the industry.
5. SAMARTH 2.0: An upgraded skilling initiative to create a trained workforce aligned with the evolving needs of the textile industry through industry-academia partnerships.

Strengthening the Fibre Value Chain

The National Fibre Scheme is a cornerstone of the budget's textile agenda. By focusing on reducing import dependency for both natural and man-made fibres (MMF), the government aims to stabilize raw material availability and costs for domestic manufacturers. This move is critical as the global textile market continues to shift towards MMF, an area where India has historically lagged despite its strong cotton base. Achieving self-reliance in fibres is expected to insulate the domestic industry from global price volatility and supply chain disruptions.

Infrastructure Push with Mega Textile Parks

To promote scale and attract large-scale investments, the Finance Minister announced that mega textile parks will be established in 'challenge mode'. These parks are envisioned as integrated manufacturing hubs with world-class infrastructure, including plug-and-play facilities, common effluent treatment plants, and uninterrupted power. A significant focus of these parks will be on value addition in technical textiles, a high-growth segment with vast potential in industrial and strategic applications. This initiative builds on the momentum of the PM MITRA (Mega Integrated Textile Region and Apparel) parks scheme.

Key Budget 2026 Announcements for the Textile Sector

Announcement	Key Objective	Potential Impact
National Fibre Scheme	Achieve self-reliance in natural & man-made fibres.	Reduce import dependency and stabilize raw material costs.
Mega Textile Parks	Promote scale and focus on technical textiles.	Attract large investments and boost high-value exports.
Export Obligation Extension	Extend export fulfilment period from 6 to 12 months.	Improve working capital cycle for exporters and ease compliance.
SAMARTH 2.0	Modernise the skilling ecosystem for textiles.	Create a skilled workforce ready for modern manufacturing.
Courier Export Cap Removal	No value limit on courier exports.	Boost e-commerce exports for MSMEs and D2C brands.

Export Facilitation and Compliance Relief

Addressing a key concern for exporters, Budget 2026 proposed significant compliance relief. The time period for fulfilling export obligations for textile garments and leather products has been extended from six months to one year. This measure is expected to improve the working capital cycle for exporters, providing them with greater operational flexibility in a volatile global market.

Furthermore, the complete removal of the ₹10 lakh per-consignment value cap on courier exports is a major boost for e-commerce. This will directly benefit thousands of small and medium-sized textile enterprises and direct-to-consumer (D2C) brands, enabling them to seamlessly access global markets and cater to international buyers.

Supporting Traditional Crafts and Artisans

The budget also reinforces its commitment to India's rich heritage of traditional textiles. The Mahatma Gandhi Gram Swaraj Initiative and the National Handloom and Handicraft Programme (NHHP) are designed to strengthen Khadi, handloom, and handicrafts. These initiatives will focus on providing global market linkages, branding support, and enhanced training to help weavers and artisans improve quality and compete effectively in both domestic and international markets.

Market Reaction and Industry Outlook

The budget announcements were received positively by the market, with stocks of major textile companies like Arvind, KPR Mill, and Welspun Living registering gains. The industry has welcomed the integrated approach, viewing it as a clear policy roadmap for the next few years.

However, challenges remain, particularly the impact of high tariffs in key markets like the US and stiff competition from countries like Bangladesh and Vietnam. The success of these budgetary measures will hinge on their swift and effective implementation on the ground. If executed well, the provisions of Union Budget 2026 have the potential to transform India into a global textile manufacturing and export hub, balancing its traditional strengths with modern innovation.