Budget 2026: Gripped By US Tariff Cloud, Textile And Apparel Sector Pins Hopes On Policy Support

The US has been the single-largest market for India’s textile and apparel exports, accounting for almost 28% of the country’s textiles and apparel exporters' total revenue. India’s exports of textiles and apparel products to the US totalled nearly $11 billion in the fiscal year 2024-25.

Amid the global headwinds, the textile and apparel exporters have gone the whole nine yards to retain customers in the US — even to the extent of sharing the costs. And yet the US tariff turmoil has cast a cloud over the sector. Although existing and upcoming free trade agreements (FTAs) will create new opportunities, it will take time for them to materialise.

At any cost, the significance of the US for the sector cannot be undermined.

Manufacturing, MSME units

Against this backdrop, the textile and apparel sector looks forward to the Union Budget 2026-27, with hopes of concerted measures and policy interventions intended to boost competitiveness. Measures to spur manufacturing and make the availability of raw materials at internationally competitive prices easier, promoting sustainability by enabling MSME units to make a smooth transition to clean energy, and encouraging innovation are some of the strategies that could be prioritised in the budget. 

More specifically, strategic interventions in the following three parameters could deliver significant outcomes in the long term:

1. Raw material and price stability:

• Removal of import duty on all varieties of cotton fibre
• Change in the MSP formula for cotton to align with international benchmark prices
• Launch of a Cotton Price Stabilisation Fund

2. Competitiveness, technology, and sustainability:

• Launch of a Green Technology Scheme to support MSMEs in transitioning to clean energy and sustainable practices
• Launch of an alternative to the Technology Upgradation Fund Scheme
• Launch of a scheme to promote indigenous textile machinery manufacturing
• Address high power costs and industrial cross-subsidies
• Establishment of a National Textile Fund

3. Trade Facilitation:

• Extension of RBI’s Trade Relief Measures to cover the entire textile value chain
• Increase in Basic Customs Duty on all types of knitted fabric to curb imports at unviable prices
• Reintroduction of the MEIS Scheme
• Extension of the facility of duty-free Import of specified items/goods

These measures could increase the resilience of India’s textile and apparel sector and help it become a more powerful force globally, while also contributing towards realising the national target of creating a $350 billion textiles and apparel sector by 2030.

The Way Forward

A Union Budget is never just a mere statement of accounts, but an instrument to underline key policies and priorities of the government, reflecting the direction in which the country, already driven by the "development-for-all" principle, would move, in line with the vision for inclusive growth and improving the quality of life of the citizens.

This budget presents an opportunity to create a stronger growth ecosystem for the Indian textiles and apparel sector. All eyes are on it. 

(The writer is Chairman of the Confederation of Indian Textile Industry [CITI]. Views are personal.)