Budget 2024: Government's Boost For Textile Sector—Allocation, Duty Cuts, Other Incentives

Indian textile got a boost from the government after it increased its budgetary allocation including customs duty cuts and other incentives to review the sectors growth.

The Indian government budgetary allocation for the textile ministry increased to Rs 4,417 crore for the financial year 2024–25 from Rs 4,389 in the previous year, signalling a strong commitment to bloating the sector. However, when compared to the revised budget estimate of Rs 3,443 crore for fiscal 2024, it is a substantial 28.29% increase from the previous year.

One of the key highlights of the 2024–25 budget is the significant increase in funding for the Production Linked Incentive (PLI) scheme for textiles. The allocation has jumped to Rs 45 crore from a mere Rs 5 crore in 2023–24. This substantial rise is expected to encourage more investments and enhance the sector's competitiveness on a global scale.

Similarly, the PM Mitra scheme has received a boost with an allocation of Rs 300 crore for 2024–25, compared to Rs 200 crore in the budget estimate for 2023–24. The revised budget estimates for the previous year were Rs 52.30 crore, marking a considerable increase in support for this initiative aimed at fostering integrated textile parks across the country.

The government has also cut customs duties on several key inputs. The government has reduced the customs duty on methylene-bis from 7.5% to 5%. Additionally, they have reduced the duty on wet white, crust, and finished leather from 10% to nil. The custom duty on real down filling material from duck or goose has been slashed from 30% to 10%, and there is a proposed nil custom duty on certain additional accessories and embellishments used in the production of export goods.

These reductions are expected to lower production costs and enhance the competitiveness of Indian textiles in the global market.

The continued focus on the Production Linked Incentive scheme will facilitate increased investment in the textile sector, boosting productivity and growth, according to CARE Edge. The reduction in customs duties will lower production costs, thereby promoting exports of textile and leather garments and footwear by enhancing their international competitiveness, it said.

The employment-linked incentive scheme is likely to benefit the labour-intensive textile industry by creating jobs and supporting regional economic growth. Additionally, the increased allocation for the PM Mitra Park scheme is anticipated to drive investments in large-scale capacities, resulting in economies of scale and enhanced export competitiveness for Indian textiles.

These measures could benefit textile companies such as Trident Ltd, Vardhman Textiles, Arvind Ltd., Nitin Spinners Ltd, Sutlej Textiles and Industries Ltd, Welspun Living Ltd., and KPR Mill Ltd., positioning them for growth and enhanced market presence.