The Union Budget 2025 brings an array of strategic reforms and initiatives aimed at empowering India’s textile sector. As one of the most vital industries in the country, the textile sector continues to play a pivotal role in boosting employment, contributing to exports, and enhancing economic growth. Among the key highlights in the budget, there is a clear focus on improving cotton farming, enhancing MSME growth, and boosting the domestic production of textiles and technical textiles, all of which are expected to have a transformative impact on the textile market, especially in textile hubs like Surat.
1. Mission for Cotton Productivity: Transforming Cotton Farming
For the benefit of millions of cotton-growing farmers, the government has announced a ‘Mission for Cotton Productivity,’ a five-year initiative aimed at significantly enhancing the productivity and sustainability of cotton farming. This mission aligns with India’s integrated 5F vision for the textile sector farm to fiber, fiber to fabric, fabric to fashion, fashion to foreign helping increase cotton yields and ensuring a steady supply of high-quality cotton.
Surat, known for its massive textile industry, stands to benefit from this mission, as it will lead to a steady supply of extra-long staple cotton varieties, crucial for quality textile manufacturing.
2. Revised Classification for MSMEs: Empowering Small Textile Manufacturers
The Union Budget 2025 proposes a revision in the classification criteria for MSMEs, which will directly benefit small and medium-sized textile manufacturers. With over 1 crore MSMEs already contributing 36% of India’s manufacturing output and 45% of exports, the new measures will give these businesses access to higher investment limits, improved technological upgrades, and better access to capital. This will help textile manufacturers in Surat and other regions grow their operations, scale efficiently, and enhance their competitiveness in the global textile market.
Annexure D
significant enhancement of credit availability with guarantee cover
To improve access to credit, the credit guarantee cover will be enhanced:
- For Micro and Small Enterprises, from ₹5 crore to ₹10 crore, leading to additional credit of ₹1.5 lakh crore in the next 5 years;
- For Startups, from ₹10 crore to ₹20 crore, with the guarantee fee being moderated to 1 percent for loans in 27 focus sectors important for Atmanirbhar Bharat; and
- For well-run exporter MSMEs, for term loans up to ₹20 crore.
3. Enhanced Credit Availability and Customized Credit Cards
In a bid to improve the financial landscape for MSMEs and startups, the government has proposed significant enhancements in credit availability. For micro and small enterprises, the credit guarantee cover will increase from ₹5 crore to ₹10 crore, which will enable textile manufacturers to access an additional ₹1.5 lakh crore in credit over the next five years.
Moreover, the introduction of customized credit cards with a ₹5 lakh limit for micro-enterprises registered on the Udyam portal will empower Surat’s small textile businesses to expand their operations, invest in machinery, and strengthen their product offerings.
4. Support for Domestic Manufacturing and Value Addition in the Textile Sector
The government is also taking decisive steps to boost domestic manufacturing of technical textiles, a key area for innovation in the textile industry. For products like agro-textiles, medical textiles, and geo-textiles, the budget proposes to add two more types of shuttle-less looms to the list of fully exempted textile machinery.
These changes will help Indian manufacturers lower their production costs and remain competitive in the global market. This is particularly beneficial for Surat’s textile industry, which has been a hub for innovation and manufacturing in the textile sector.
5. Customs Duty Adjustments to Boost Textile Manufacturing
The Union Budget 2025 brings significant changes to customs duties, which will have far-reaching implications for the textile sector. Customs duties on key items like wet blue leather and shuttle-less looms have been reduced to nil, leading to lower input costs and greater value addition within the country.
Additionally, the BCD rate on knitted fabrics has been revised from 10% or 20% to 20% or ₹115 per kg, whichever is higher. These changes will ensure that textile manufacturers in Surat and across India benefit from reduced operational costs, enabling them to be more competitive in the global textile market.
CUSTOMS DUTY RATE CHANGES
1. Reduction in customs duty to reduce input costs, deepen value addition, promote export competitiveness, correct inverted duty structure, boost domestic manufacturing, etc [with effect from 2.2.2025]
2. Increase in Customs duty [with effect from 02.02.2025]
Export Promotion – Leather sector
The leather sector proposes to fully exempt BCD on Wet Blue leather to facilitate imports for domestic value addition and employment and also propose to exempt crust leather from 20% export duty to facilitate exports by small tanners.
Export duty on Leather [with effect from 2.2.2025]
6. Promotion of Export Competitiveness in the Leather and Textile Sectors
To further boost India’s export competitiveness, the government has announced the full exemption of BCD on wet blue leather to facilitate imports for domestic value addition, which will benefit India’s leather industry and provide employment opportunities. Moreover, crust leather will now be exempt from the 20% export duty, fostering greater export opportunities for small tanners.
The textile sector, including Surat’s fabric manufacturers, stands to benefit from these export-promoting measures as they allow for increased demand and a larger share in global markets.
The Union Budget 2025 presents a transformative vision for India’s textile sector. With a strong emphasis on cotton productivity, MSME empowerment, credit facilitation, and technological advancements, the government is setting the stage for significant growth in the textile market.
Must read, Impact on Surat Textile Industry & MSMEs
The Surat textile industry, a vital hub for India’s textile manufacturing, will play a crucial role in realizing this vision. As the government continues to streamline policies and reduce barriers to growth, the future of India’s textile sector looks brighter than ever, with greater opportunities for manufacturers, exporters, and entrepreneurs to thrive in a competitive global market.
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These strategic initiatives underscore the government’s commitment to supporting India’s textile sector and ensuring that it remains a key driver of economic growth and employment generation. The upcoming years are set to witness substantial advancements, with Surat at the forefront of this textile revolution.
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