
Budget 2025 | Textile industry seeks interest subsidy, lower PLI investment floor in budget

Summary
- India's textile exports stood at a strong $41.12 billion in FY22, before starting to decline. They fell to $35.55 billion in FY23 and dropped further to $34.40 billion in FY24. During April-December of the ongoing financial year, textile exports stood at $26.56 billion.
India's textile industry, a key driver of the economy, employs about 45 million people and contributes significantly to the nation’s exports.
As the world undergoes a shift in sourcing patterns, driven by strategies like China-plus-one that seek to diversify supply chains out of China, and disruptions in competing countries such as Bangladesh, India is positioning itself as a global sourcing destination. However, challenges such as high raw material costs, outdated infrastructure, and the need for modernization persist, requiring targeted policy interventions.
Ahead of the Union budget, the industry has high expectations for reforms to boost its global competitiveness. The demands include extending the interest equalization scheme for three years to help exporters remain cost-competitive and revising the production linked incentive (PLI) scheme with lower investment thresholds.
Companies looking to benefit from and participate in the PLI scheme for textiles have to meet either of these two investment thresholds: A minimum investment of ₹300 crore and a minimum turnover of ₹600 crore, and a minimum investment of ₹100 crore and a minimum turnover of ₹200 crore.
The interest equalization scheme, introduced in 2015, is a government scheme under which loans to exporters for purchase of raw materials are extended at reduced rates.
In September 2021, the government introduced PLI scheme for textiles with an outlay of ₹10,683 crore for 5 years in its bid to promote domestic production of man-made fabric, garments, and technical textiles and cut reliance on imports.
Read more: Textiles exports a silver lining as India’s trade deficit widens
India's textile exports stood at a strong $41.12 billion in FY22, before starting to decline. They fell to $35.55 billion in FY23 and dropped further to $34.40 billion in FY24. During April-December of the ongoing financial year, textile exports stood at $26.56 billion.
“India is on the track to become a key player in the global textile market, with exports projected to reach $45 billion by 2025. Growing demand in markets like the US, Europe, and the Middle East presents a significant opportunity. Industry is also embracing sustainability, with eco-friendly practices and green technologies becoming the norm to meet rising consumer demand for sustainable products," said Vinay Thadani, CEO at Vishal Fabrics Ltd.
Threads of opportunity
Industry players are also seeking the reinstatement of the Technology Upgradation Fund Scheme and the establishment of a National Textile Fund to support strategic investments and technology adoption.
To tackle the challenges faced by cotton farmers due to fluctuating raw material prices and to encourage increased cotton acreage to meet growing global demand, the Centre has introduced a pilot project under the Bhawantar Bhugtan Yojana in Telangana. This scheme will provide price difference compensation directly to farmers through the Direct Benefit Transfer (DBT) mechanism, ensuring income stability and incentivizing higher production.
The textile sector has urged the government to remove import duties on all cotton varieties and implement a DBT-based Minimum Support Price (MSP) scheme for cotton. Besides, the reintroduction of the Technology Mission on Cotton II, aimed at raising the quality and yield of cotton, is expected to enhance productivity through advanced seed technology and improved farming practices.
Modernization and sustainability are critical to competing globally. The industry is calling for exemptions on customs duty for garment machinery, a new capital subsidy scheme for MSMEs, and long-term soft loans for sustainability-focused investments. In recent years, government support has laid a strong foundation. Measures like the National Technical Textiles Mission, PM Mega Integrated Textile Region and Apparel (PM MITRA) scheme, and increased allocations for flagship schemes have strengthened the sector’s growth prospects.