Union Budget 2026–27 Lays Out Major Textile Reforms With New Parks And Export Incentives

The Union Budget 2026–27 has outlined a comprehensive strategy to reinforce India’s textile industry. Finance Minister Nirmala Sitharaman announced several initiatives aimed at improving competitiveness, attracting investment, and generating employment.

The proposals place strong focus on modernising machinery across the sector. They also prioritise the adoption of advanced technology and the creation of shared testing and certification facilities to upgrade traditional textile clusters.

One of the central features of the Budget is the proposal to establish Mega Textile Parks under a challenge-based framework. These parks are intended to provide end-to-end infrastructure, improve economies of scale, and enhance value addition across the sector. Officials said the initiative will help attract private investment and support large-scale manufacturing.

The proposed parks will also promote the expansion of technical textiles, a segment that is witnessing rapid growth. These textiles are widely used in healthcare, defence, industry, and infrastructure, helping diversify India’s textile production base.

Integrated Programme for the Textile Sector

The Budget also announced a new integrated programme for the textile sector, structured around five key components. These include a National Fibre Scheme, a Textile Expansion and Employment Scheme, a National Handloom and Handicraft Programme, the Tex-Eco Initiative, and Samarth 2.0.

Samarth 2.0 has been designed as an enhanced skilling initiative to upgrade the textile workforce. The programme will deepen collaboration between industry and academic institutions to ensure a steady supply of skilled, job-ready manpower across the entire value chain.

According to the Ministry of Textiles, further measures will be implemented to strengthen the khadi, handloom, and handicraft sectors. These efforts will be carried out through the Mahatma Gandhi Gram Swaraj Initiative.

The initiative focuses on branding, global market access, simplified training systems, skill development, and process improvements. It is expected to benefit weavers, rural youth, and village-based industries while strengthening the One District One Product (ODOP) scheme.

To provide relief to exporters, the government has extended the export obligation period from six months to 12 months for sectors using duty-free imported inputs, including textiles, leather garments, and synthetic footwear. This move is expected to ease compliance pressures and improve cash flow management.

Textile MSMEs will also receive greater liquidity through reforms in the Trade Receivables Discounting System (TReDS), along with the introduction of a Rs 10,000 crore SME Growth Fund aimed at nurturing future industry leaders.

Also Read: Union Budget 2026–27 Charts High-Growth Path With Unprecedented Capital Spending