UPSC Syllabus: GS Paper-3- Indian Economy
Introduction
The Union Budget 2026–27 places textiles back at the centre of economic growth, jobs, and exports. It shifts policy from scattered support to a full value-chain approach. The focus moves from only increasing output to strengthening fibres, clusters, skills, sustainability, and infrastructure. The Budget signals intent to modernise the sector while supporting artisans and rural livelihoods. It raises a key issue on whether India can also capture higher value.
Current Status of the Indian Textile Sector
- Economic contribution and scale: Textiles contribute 3% of GDP, 13% of industrial output, and 12% of total exports. It covers fibres, yarns, fabrics, and apparel across organised and unorganised segments.
- Employment generation: The sector provides direct and indirect jobs to over 45 million people. It remains one of the largest employment generators, especially for women and rural workers.
- Growth and export potential: The sector is expected to grow at 10% annually and reach $350 billion by 2030. Export potential is projected at $100 billion, driven by apparel, MMF, and technical textiles.
- Structural diversity: India’s strength lies in both mechanised mills and traditional crafts. Handloom, khadi, and handicrafts sustain large rural ecosystems alongside modern factories.
Budget 2026 Initiatives to Strengthen the Indian Textile Sector
- Shift to an integrated policy framework: Budget 2026 treats textiles as a full value chain, not as isolated segments. Fibre supply, production, skills, artisans, sustainability, and exports are addressed together.
- National Fibre Scheme: The scheme aims to ensure reliable availability of natural and new industrial fibres. It focuses on self-reliance and reducing raw-material cost pressures faced by manufacturers.
- Textile Expansion and Employment Scheme: This scheme targets modernisation of traditional textile clusters. It provides capital support, technology upgrades, and access to common testing and processing facilities.
- National Handloom and Handicraft Programme: Multiple existing schemes are merged into one consolidated programme. This simplifies implementation and improves support for artisans through training and market linkage.
- Mahatma Gandhi Gram Swaraj Initiative: The initiative strengthens khadi, handloom, and handicrafts. It focuses on better branding, improved market access, and skill training for rural producers.
- Samarth 2.0 for skill development: Samarth 2.0 upgrades workforce skills through industry–academia collaboration. It aims to align training with modern production needs and new textile segments.
- Tex-ECON initiative for sustainability: Tex-ECON promotes environmentally responsible textile production. It encourages cleaner processes and supports the shift towards sustainable textiles.
- Mega textile parks in challenge mode: New textile parks aim to improve scale and logistics efficiency. They support integrated manufacturing and higher value addition, especially in technical textiles.
- Push for technical textiles and MMF apparel: The Budget lowers entry barriers through duty exemptions on specialised machinery. It seeks to reduce import dependence and expand exports in high-growth segments.
- Higher budgetary allocation: The nearly 7% rise in the Textiles Ministry allocation signals long-term policy commitment. It supports smoother implementation of existing schemes during global uncertainty.
Major Concerns in Strengthening the Indian Textile Sector
- Low value capture in global markets: India exports large textile volumes but remains in low-margin segments. Budget 2026 focuses on production and scale, while design education, brand ownership, trend intelligence, and creative leadership receive little policy attention.
- Skilling limited to operational roles: Samarth 2.0 focuses on shop-floor skills. Creative, managerial, and system-level capabilities remain underdeveloped.
- Artisan income insecurity: Market access improves visibility but not pricing power. Fragmented supply chains and weak bargaining persist.
- SME access to finance: Many small and household units remain outside formal systems. This limits access to credit and government support.
- Environmental challenges: Wet processing is energy- and water-intensive. Dyeing alone uses 43% of total sector energy and causes pollution.
- Global trade uncertainty: Exporters face tariff pressures and strong competition from Bangladesh and Vietnam. Compliance norms are also tightening.
Way Forward
- Shift focus from volume to value: Policy must support design, branding, and creative authorship. This is key to moving up the global value chain.
- Strengthen artisan protections: Assured procurement, transparent pricing, and quality certification are needed. Direct market platforms can improve income security.
- Expand skill definition: Skilling must include design, sustainability standards, and digital tools. This helps meet changing global demand.
- Promote green infrastructure: Common boilers and shared facilities can cut pollution. Cluster-level solutions improve efficiency and compliance.
- Use trade openings strategically: New trade agreements offer access. Competitiveness will depend on standards, branding, and differentiation.
Conclusion
Budget 2026 marks a clear shift in textile policy towards integration and long-term thinking. It strengthens fibres, infrastructure, skills, and rural livelihoods. Yet, production-led growth alone is not enough. Future success depends on value creation, artisan security, creative capacity, and sustainability. If these gaps are addressed, textiles can deliver not only exports and jobs, but dignity and global leadership.
Question for practice:
Examine how Budget 2026 seeks to strengthen the Indian textile sector and why challenges of value capture and competitiveness still remain.
Source: Indian Express
