The Indian textile and apparel industry, particularly the Tamil Nadu textile cluster—one of the country’s largest manufacturing and export hubs—has broadly welcomed the Union Budget 2026–27 for its strong emphasis on infrastructure development, skill enhancement, and export facilitation. However, industry stakeholders have cautioned that the continued 11 per cent import duty on cotton could limit the full impact of these reform measures.
Industry leaders stressed that timely availability of quality cotton at globally competitive prices is critical for meeting export commitments and sustaining employment across the textile value chain, from spinning and weaving to garments and value-added products.
Budget Measures Welcomed by the Industry
Stakeholders have praised several budget initiatives aimed at strengthening the textile ecosystem. Key among them are:
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The National Fibre Scheme, aimed at improving fibre availability and diversification
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Expansion of mega textile parks to boost scale, efficiency, and global competitiveness
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Rollout of Samarth 2.0, designed to modernise and upgrade textile skilling and workforce training
Industry representatives said these measures would help improve productivity, enhance technology adoption, and support India’s ambition to emerge as a global textile manufacturing hub.
Cotton Import Duty Raises Alarm
Despite the positive intent of the Budget, industry leaders expressed concern over the decision to retain the 11 per cent import duty on all varieties of cotton.
Southern India Mills Association (SIMA) Chairman Durai Palanisamy said the duty needs to be removed urgently to address shortages of quality cotton and maintain export competitiveness.
He pointed out that domestic cotton prices are already around five per cent higher than international prices and nearly 15 per cent costlier than Brazilian cotton, a key competitor in the global market.
“This price gap is expected to widen further in the coming months, which could seriously affect the financial viability of the textile value chain,” he warned.
Durai noted that the textile and apparel sector employs nearly 35 million people directly and contributes about 75 per cent of India’s total textile and clothing exports, with Tamil Nadu playing a leading role in yarn, fabric, and garment production.
Farmers’ Interests Protected, Say Industry Leaders
Addressing concerns about the impact of cotton imports on farmers, industry leaders said domestic growers are already protected through the Minimum Support Price (MSP), which remains nearly 20 per cent higher than global prices.
“Imports have never hurt farmers,” Durai said, adding that India can export cotton during peak production months and import during the off-season. “This ensures a balanced and win-win approach for farmers, mills, and exporters alike.”
GST on Job Work Disappoints Industry
Echoing similar concerns, M. Jayapal, Chairman of the Recycled Textile Federation, said the continuation of import duty restricts access to raw materials at competitive prices. He also expressed disappointment over the decision to retain GST on job-work units at 18 per cent, instead of reducing it to five per cent.
“This is a setback for small and medium units that form the backbone of the textile value chain,” he said, adding that lower GST could have improved compliance and eased cost pressures.
Exporters Optimistic on Trade Facilitation
On the export front, apparel exporters welcomed the Budget’s focus on liquidity support, customs reforms, and trade facilitation.
A. Sakthivel, Chairman of the Apparel Export Promotion Council (AEPC), said initiatives aimed at simplifying customs procedures and documentation would help reduce transaction costs, improve turnaround time, and enhance the global competitiveness of Indian exporters.
Way Forward
While the Union Budget 2026–27 sets a strong foundation for modernising the textile sector through infrastructure investment and skill development, industry leaders believe rationalisation of raw material costs—especially cotton—will be crucial to fully unlock the sector’s growth potential.
As global competition intensifies, stakeholders say aligning domestic policies with international market realities will be essential to protect exports, generate employment, and sustain India’s position as a leading textile manufacturing nation.