Union Budget 2026: A Transformative Push for India’s Textile Sector

The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, has signalled a strong policy thrust for India’s labour-intensive textile sector, aiming to boost self-Reliance, employment, innovation, and global competitiveness. The government’s measures focus on inclusive growth, rural development, and export promotion, positioning textiles as a key driver of India’s economic and social agenda.

Integrated Textile Programme: Five Pillars of Growth

To modernise and strengthen the textile ecosystem, FM Sitharaman proposed an integrated programme consisting of five key components:

1. National Fibre Scheme - Focused on achieving self-reliance in natural fibres like silk, wool, jute, as well as man-made and technical fibres, this initiative aims to reduce import dependency and strengthen India’s raw material base for textiles.
2. Textile Expansion and Employment Scheme - Designed to modernise traditional clusters, this scheme will provide support for machinery, technology upgrades, and common testing and certification centres, enabling Indian textile clusters to compete globally.
3. National Handloom and Handicraft Programme (NHHP) – The NHHP will integrate existing schemes, providing targeted support to weavers and artisans, while enhancing production quality and ensuring market competitiveness.
4. Text-ECON Initiative - Focused on making India’s textiles globally competitive and sustainable, Text-ECON will encourage innovation, design development, and adoption of eco-friendly practices across the sector.
5. SAMARTH 2.0 - This initiative aims to modernise and upgrade textile skills through partnerships with industry and academic institutions, ensuring a steady supply of trained professionals for the evolving textile landscape.
    

Mega Textile Parks & Mahatma Gandhi Gram Swaraj Initiative

In a significant move, the Finance Minister announced plans to set up mega textile parks in “challenge mode”. These parks will not only promote scale and efficiency but also focus on value addition for technical textiles, an area where India is poised to become globally competitive.

Complementing this, the Mahatma Gandhi Gram Swaraj Initiative was unveiled to strengthen Khadi, handloom, and handicrafts. This program aims to provide global market linkages, branding support, and enhanced training and skilling, directly benefiting weavers, village industries, participants in the One District One Product (ODOP) initiative, and rural youth.

The Budget announcements were well-received by the market, with textile stocks rallying sharply. Companies like Kitex Garment, Pearl Global, and Arvind led the gains, reflecting investor optimism about policy continuity, modernisation, and export support. Other export-oriented players, including Gokaldas Exports, KPR Mill, and Welspun Living, also saw significant upticks in trading, underscoring renewed confidence in the sector.

Despite strong policy support, the sector faces some near-term headwinds, particularly in exports. Global demand fluctuations, trade barriers, and competition from countries like Bangladesh and Vietnam continue to pose challenges. The success of the Budget’s initiatives will depend on the government’s ability to link production modernisation with global market access and strengthen the technical textile and high-value segments.

Conclusion
Budget 2026 marks a turning point for India’s textile sector, combining skill development, modernization, and global outreach. If implemented effectively, these measures can make India a global textile powerhouse, create millions of jobs, and provide a sustainable boost to rural livelihoods. With strategic policy support and targeted interventions, India’s textile industry is poised to balance tradition with innovation, ensuring that handlooms and high-tech fibres both thrive in the coming decade, even as export challenges remain a focus area.

Disclaimer: The article is for informational purposes only and not investment advice.