Budget blues
Budget 2024-25, presented by Union Finance Minister Nirmala Sitharaman on July 23, 2024, places special focus on employment by allocating Rs 1.48 billion for education and skilling. Though there was no major announcement specific to textiles, the budget claims to have addressed some of the key concerns raised by the industry, which is the second-largest generator of employment in the country after agriculture.
The Finance Minister has increased the allocation for the textiles sector by Rs 974 crore (up 28 per cent) to Rs 44.17 billion in FY25 compared to Rs 34.43 billion in 2023-24. The centrally sponsored schemes for promoting the usage of geotextiles in the North-East, PM-MITRA, protection of the handlooms, and raw material supply received an allocation boost of 45.6 per cent to Rs 38.66 billion in 2024-25 from Rs 26.54 billion in FY24. Similarly, the allocation for research and capacity building in the sector has been raised to Rs 6.86 billion from Rs 3.80 billion. The budget proposal of the Credit Guarantee Scheme (CGS) to enable MSMEs to get term loans for the purchase of machinery and equipment without collateral or third-party guarantee is expected to bring major relief for the industry.
In the last few years, the government has been pushing for growth in technical textiles and man-made fibre segments. The government aims to increase exports of technical textiles, which are used in various industries (such as construction, agriculture, aerospace, automotive, healthcare, etc.), from about $2.5 billion at present to $10 billion in the next five years. In alignment with this policy direction, the National Technical Textiles Mission has received 120.59 per cent more funds (Rs 3.75 billion) in FY25 compared to Rs 1.75 billion in 2023-24.
Though India is the world’s second-largest producer of silk and its sericulture, or silk production, industry employs an estimated 9.2 million people in rural and semi-urban areas, the country still imports silk from several nations given the high domestic demand for this costly fabric. To propel the sector’s growth, the Finance Minister has increased the budget allocation for silk promotion to Rs 9 billion from Rs 8.75 billion. The reduction in customs duty on Spandex yarn will benefit the user industry, while the expansion of trims and embellishments under the Import of Goods at Concessional Rate of Duty (IGCR) will aid apparel exporters.
The budget has some disappointments as well. There are no investment incentives for capacity building and modernisation, and no scheme to support the textile machinery industry by incentivising import substitution. Experts feel budget announcements will be inadequate to encourage scaling up by Indian players, who are fast losing out to their competitors largely due to lack of scale. Also, the wait for a revised Production Linked Incentive (PLI) scheme for MSMEs and apparel sectors will be longer than anticipated. Textile traders have been demanding changes and postponement of the 45-day payment rule for MSMEs. However, the budget is silent on this issue.
The government needs to take some more bold steps for the revival of this employment-generating sector to achieve the goals of Viksit Bharat.
