How does the Union Budget 2023 stand out for the textile and apparel industry?

The Union Budget was presented on 1st of February by honourable Finance Minister Nirmala Sitharaman. Like every year, the industry waited with bated eyes to know the results of this year’s budget and how it may work out for the industry. To start with, the allocation for the textile sector for year 2022-23 in the Union was about 67.63 per cent lower than the actual budget allocation for 2021-22. Further, keeping the momentum and the industry growth in mind it has been revealed in Union Budget 2023-24 that fund allocation to the textile sector has been increased by 22.6 per cent for next fiscal. This is a huge jump as compared to the last few years. But the question now is to delve deeper to understand the allocation with more detail and see whether the expectations of the industry has been met or not. Figure 1 represents year wise total budget allocated for Textile sector

Figure 1: Year wise total budget allocated for Textile sector

Let’s eye the expectations that the industry put forth before the budget was announced.

  • The textile industry in India is looking at several measures to boost growth, including pursuing free-trade agreements with major export destinations, fast-tracking the PM-MITRA parks scheme, stabilizing cotton prices through government initiatives, and rolling back the proposed higher GST rate from 12% to 5% effective from January 1, 2023. The industry hopes that these measures will help increase apparel shipments.
  • Keeping these main thoughts and expectations as the backdrop, let’s see what the government has announced in this Union Budget.
  • The Confederation of Indian Textile Industry (CITI) has conducted a study on fund allocations for the sector in Union Budget 2023-24. It said that the minister has raised allocations for ATUFS by 38.5 per cent. The allocation for National Handloom Development Programme is increased by 28.2 per cent. National Handicraft Development Programme received 25 per cent more and ₹141.54 crore for Textile Cluster Development Scheme which is 61% more than last year. Figure 2 represents the budget allocation for certain schemes and programmes in Textile sector.


Figure 2


There was no provision for cotton procurement under Price Support Scheme because market prices of cotton are hovering higher than the Minimum Support Price (MSP). The government has allocated ₹27.11 crore (80.7 per cent increase) for Integrated Wool Development Programme, ₹917.77 crore (4.9 per cent up) for Development of Silk Textiles and ₹142 crore (128.3 per cent) for Development of Jute industries. The total budget allocation for Research and Capacity Building in textiles increased by 271.4 per cent to reach about ₹711.56 crore in 2023-24, as compared to the revised budget allocation of ₹191.60 crore in 2022-23. Figure 3 represents budget allocation of certain fibre industries.


Figure 3

In the present budget, a grant of Rs. 200 crores have been kept for PM MITRA Parks, while for PLI Scheme, the grant is budgeted at Rs. 5 crores. Higher budgetary allocations are for schemes promoting capacity building and investments like National Technical Textiles Mission (NTTM), PM-MITRA and textile development cluster scheme.

Further, to meet the demands of cotton prices and in order to enhance the productivity of extra-long staple (ELS) cotton, the Government has announced that it will adopt a cluster-based and value chain approach through Public Private Partnerships (PPPs). This will facilitate collaboration between farmers, the state, and industry for input supplies, extension services and market linkages. In the long run, it will be helping garment industry provide raw material security.

Five new HS Codes for cotton have been identified for further classification of cotton as per staple length. This will help in calibrating policy support for the segments which are import dependent or need further incentivisation.

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