Union government announces Rs 44.14 billion for budget 2024-25
The revised budget for 2023-24 allocated Rs 34.24 billion for revenue and Rs 180.56 million for capital expenditure, totalling Rs 34.43 billion.
The Indian government has increased the budget allocation for the textile sector by 28 per cent to Rs 44.17 billion for the fiscal year 2024-25. Union Finance Minister Nirmala Sitharaman proposed significant increases for cotton procurement, the National Technical Textile Mission, the Integrated Scheme for Skill Development, and several other programs.
The government has proposed Rs 43.73 billion for revenue and Rs 430.65 million for capital expenditure, totalling Rs 44.17 billion for various schemes and administrative expenses. In comparison, the revised budget for 2023-24 allocated Rs 34.24 billion for revenue and Rs 180.56 million for capital expenditure, totalling Rs 34.43 billion. Let’s see how the industry has reacted to this year’s budget;
K K Lalpuria, CEO and ED, Indo Count Industries
“The Union Budget 2024 is a progressive step towards fostering economic growth and enhancing the competitiveness of Indian industries. The reduction of the corporate tax rate for foreign companies to 35 per cent and the simplification of FDI rules are commendable measures that will attract more international investments, benefiting sectors across the board. For the textile industry, the focus on MSMEs and the emphasis on employment and skilling are particularly noteworthy. The initiatives for job creation, skilling programs, and financial support for MSMEs will significantly bolster the textile sector, enabling us to scale up operations, enhance productivity, and remain globally competitive. Additionally, the allocation of Rs 2.66 trillion for rural development and the introduction of the PM Surya Ghar Muft Bijli Yojana will have a positive ripple effect on the textile industry by improving infrastructure and reducing energy costs. Overall, this budget lays a strong foundation for sustainable growth and innovation, and we look forward to leveraging these opportunities to drive further advancements in the textile sector.”
Rahul Garg, CEO & Founder, Moglix
“The removal of angel tax is a welcome move for India’s startup ecosystem. This, coupled with the establishment of a Rs 10 billion VC fund for the space economy, will foster innovation. The budget’s focus on manufacturing, with the introduction of plug-and-play industrial parks, is progressive. MSMEs will benefit significantly from the credit guarantee scheme, new assessment models by PSU banks, and increased Mudra loan limits. The substantial allocation of Rs 11 trillion for infrastructure especially nature resilient is crucial for building a Viksit Bharat. The strategic shift towards nuclear energy as a major power source is visionary. Finally, the emphasis on cultural heritage through the development of the Vishnupad, Mahabodhi temple corridors, Rajgir, and Nalanda is a welcome addition.”
N Chandran, Chairman, Eastman Exports
“The Budget priorities such as employment and skilling, social justice and manufacturing are a step in the right direction to in pursuit of Viksit Bharat 2047 and the government has rightly renewed its focus on the focus on 4 major pillars: Poor, Women, Youth and Farmer. I genuinely think the Budget holds great promise in terms of addressing the labour and skill shortage, which is the need of the hour for labour intensive sector like textiles. Further, the announcement of a 3 trillion corpus for women-centric schemes will increase their participation in the workforce. The plans to set up hostels for them and establishing crèche facilities are key to particularly encourage unskilled and semi-skilled women including women to remain in the workforce, thus fostering a more inclusive and productive economy.”
Ritesh Khandewal, Founder, ZYOD
“The focus on manufacturing and MSMEs in this year’s budget is a welcome development. The Prime Minister’s package of 5 schemes, especially the ‘job creation in manufacturing’ and ‘Credit Guarantee Scheme for MSMEs in the manufacturing sector’, promises significant growth for the sector. The increased Mudra loan limit from Rs 1 million to Rs 2 million and the revised TReDS onboarding threshold will significantly benefit MSMEs.. Additionally, credit guarantee schemes and mechanisms for facilitating bank credit during stress periods are crucial steps forward. These measures will provide much-needed support, ensuring business continuity and fostering long-term growth. Notably, the ability to secure collateral-free term loans for machinery and equipment empowers MSMEs to invest in innovation and expansion. We are confident these initiatives will contribute significantly to the resurgence of the manufacturing sector”
Ankit Jaipuria, Founder, ZYOD
“The budget offers a significant opportunity for manufacturing, innovation, and upskilling talent. With a major push to manufacturing-led companies and initiatives to upskill over 2 million youth in the next five years, we expect a major increase in job creation in this sector. The abolition of the angel tax is another positive development towards fostering a robust startup ecosystem that encourages more private investment. Additionally, simplifying the FDI rules will further attract more investment, and facilitate smoother trade, thereby strengthening the economy and enhancing India’s position in global trade”
Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI)
“This budget is extremely pragmatic and innovative in some of the bold decisions and directions it has taken to encourage employment directly. The steps include an internship scheme, the decision to reimburse one month’s wages for new employees, and subsidies for employees earning over a lakh of rupees. These are excellent steps being taken. However, there are many open-ended areas at this point, and we await the details before making specific suggestions. Nonetheless, this is a visionary, pragmatic, and very innovative budget that the Finance Minister has presented. Whilst most of these measures are for all industries, they will likely benefit the textile and apparel industry equally, if not more, since it is more labour-oriented. Therefore, we are confident it will benefit the apparel industry.
Furthermore, additional measures announced to support bank credits to MSME’s and easing of foreign investment will also benefit textile and apparel industry. The import relaxation in some of the important raw materials, trims and accessories required for garment manufactures will also help the garment manufacturers to be more competitive, especially in the Export markets.
Amar Nagaram, Founder and CEO, Virgio
“The Finance Minister’s budget theme, with its emphasis on Employment, Skilling, and MSMEs, showcases a forward-thinking approach that is well-suited to the evolving needs of the Manufacturing and D2C industries. This budget, aligned with the Viksit Bharat vision during the Amrit Kaal, introduces several key incentives aimed at boosting job creation and enhancing workforce skills. The special focus on MSMEs will provide critical support for innovation and expansion, facilitating growth across various sectors. Importantly, the abolishment of the Angel Tax will play a pivotal role in supporting startups, easing fundraising, and encouraging more investment in innovative businesses. Overall, this growth-oriented budget represents a significant step toward creating a more inclusive and dynamic economy, fostering opportunities for businesses and entrepreneurs alike.”
Rakesh Mehra, Chairman, Confederation of Indian Textile Industry (CITI)
“MSME accounts for about 80 per cent of the Indian Textile Industry. The credit assurance schemes announced today will provide the much-needed impetus to the growth of large number of textile and garment MSMEs and enable them to expand their operations and innovate.”
The increased focus of Government towards skilling and the announcement of the Employment Linked Incentive scheme coupled with the decision of easing the FDI norms will facilitate new investments in the textile industry. Moreover, the financial support for clean energy transition, energy initiatives, and energy audits underscores the Government’s commitment to sustainable development. “We believe that these initiatives will pave the way for a more robust and sustainable industrial ecosystem”, he said. The various benefits provided through income tax relaxation will also increase purchasing power of the consumers which may translate to improved domestic demand for the textile industry.
Mehra said that though “the Minister has addressed the need for boosting competitiveness of domestic manufacturing in her speech today, however, the downstream textile industry is suffering from non-availability of raw material, both cotton and man-made fibres at international competitive prices.” This has resulted in Indian textile industry not being able to leverage our unique strength of presence across the value chain and resulted in increased imports of value- added products over the years.
Moreover, after the expiry of the TUFS scheme in March 2022, the industry has no investment incentivisation scheme for expansion or modernization. Scaling up will be critical for the survival of the industry, which has been fast losing out to our competitors largely due to lack of scales. “With the exception of enhanced PLI scheme allocation to Rs 45 crore from earlier Rs 5 crore, there is no major announcement to address the industry’s loosing competitiveness”, Mr Mehra observed. The PLI scheme has not been able to address the investment needs of the large majority. Revival of capital subsidy schemes will be needed to ensure large-scale investments.
‘Viksit Bharat’ would need some more bold steps for the revival of this employment generating sector. “We look forward to measures to address these issues”, he said.
Akhil Jain, Executive Director, Madame
The Budget places particular focus on employment, skilling, MSMEs, and the middle class. A provision of Rs 1.48 billion for education, employment and skilling has been made. The incentive of up to Rs 3,000 per month for 2 years towards EPFO contribution for each additional employee will provide financial help to the labour-intensive garment industry.
The sector was also looking forward to announcements related to the “Ease of Doing Business” through the implementation of the National Retail Trade Policy, a reduction or rationalisation of GST rates, the reintroduction of the Technology Upgradation Fund Scheme (TUFS) to encourage innovation, and an updated Production-Linked Incentive (PLI) scheme to address existing challenges. These additional measures would have significantly contributed to the industry’s growth and competitiveness.
However, the allocation of Rs 1.48 trillion for education, employment, and skilling is a positive step. The emphasis on employment, skilling, MSMEs, and the middle class is commendable.
Vatsal Gaudani, CEO, Vatsal Exports LLP
“One of the most promising aspects of this budget is the increased allocation for research and capacity building, rising to Rs 6.86 billion from Rs 3.80 billion. This will undoubtedly enhance our industry’s innovation and global competitiveness. Additionally, the reduction in basic customs duty (BCD) on real down-filling material derived from ducks or geese is a strategic initiative to boost our leather and textile exports, making Indian products more competitive in the international market. The significant jump in allocation for the National Technical Textiles Mission, now at Rs 3.75 billion, highlights the government’s commitment to promoting advanced textiles crucial for various sectors such as construction, agriculture, aerospace, and healthcare. The goal to increase exports of technical textiles from $2.5 billion to $10 billion in the next five years is ambitious yet achievable with such support.
The budget also acknowledges the importance of the sericulture industry, which employs millions in rural and semi-urban areas, by increasing the allocation for silk promotion to ₹900 crore. Furthermore, the proposed reduction in BCD on methylene diphenyl diisocyanate for spandex yarn is a welcome move to rectify duty inversion and enhance production capabilities. The introduction of a new skilling scheme to train 20 lakh youth and upgrade 1,000 ITIs aligns skill development with industry needs, ensuring a steady supply of skilled labor. The comprehensive support for MSMEs, covering financing, regulatory changes, and technology support, is a significant boost for the sector.”
