The government may also increase the allocation for production-linked incentives for the textile sector to about Rs 600 million, up from Rs 450 million for the current fiscal year.
India plans to enhance its textile and garment industry in the upcoming budget by providing financial support, reducing tariffs on key inputs, and offering incentives to promote local production, according to two government sources.
Due to the on-going political crisis in Bangladesh, global retailers are exploring alternatives, including India, for garment imports, as reported by exporters to Reuters.
Mithileshwar Thakur, the Secretary General of the Apparel Export Promotion Council of India, mentioned that Indian exporters have been struggling to handle the surge in export orders in recent months as many US companies are seeking alternative suppliers.
India’s textile sector employs around 45 million people, and the government is considering increasing the textile ministry’s budget allocation for 2025/26 by 10-15 per cent, from the current Rs 44.17 billion.
The government may also increase the allocation for production-linked incentives for the textile sector to about Rs 600 million, up from Rs 450 million for the current fiscal year, the source added. This scheme offers tax incentives and other concessions to companies that opt for local manufacturing.
The government is also considering tariff reductions on raw materials such as polyester and viscose staple fibre, as well as textile machinery, according to a second government source.
Currently, import tariffs on fibres range from 11-27 per cent, compared to nearly zero duties in Bangladesh, which has been impacting Indian garment exporters.
Bangladesh Crisis
Between January and November last year, Bangladesh’s garment exports to the US declined by 0.46 per cent to $6.7 billion, while India’s exports grew by 4.25 per cent to $4.4 billion, according to data from the US Office of Textiles and Apparel.
Shahidullah Azim, a Dhaka-based factory owner with clients in North America and Europe, told Reuters that some American buyers have shifted their orders to India and Vietnam due to the on-going crisis in Bangladesh.
In the first eight months of the fiscal year through November, India’s textile and garment exports increased by more than 7 per cent year-on-year to over $23 billion, compared to just a 2 per cent growth in total goods exports.
Readymade garment exports grew by over 11 per cent year-on-year, reaching nearly $10 billion during the same period and are expected to surpass $16 billion by the end of March, according to Thakur from the Apparel Export Promotion Council of India.