Earlier, the Textiles Ministry had set an export target of $38 billion for the current fiscal.
"After sops were announced in the Foreign Trade Policy (FTP), the exporters have responded positively and based on it we have revised this year's textiles exports target upwards," Textiles Secretary Kiran Dhingra said.
Segments including apparel, handicrafts and carpets are upbeat about exports performance this year, she added.
To encourage exports, the government extended the interest subsidy scheme for one more year till March 31, 2013 covering segments like handlooms, handicrafts, carpets and SME sector. Besides, the garment sector was included in the scheme.
The market-linked focus product scheme was also extended till the end of the current fiscal for exports to the US and the European Union in respect of the apparel sector.
The zero % duty Export Promotion Capital Goods (EPCG) Scheme for technology upgradation extended till March 31, 2013. The scheme allows import of capital goods at zero customs duty subject to an export obligation equivalent to six times of duty saved to be fulfilled in six years.
During April-May this fiscal, the country's handicrafts and carpets shipments grew at an average rate of over 10 % year-on-year. However, apparel exports growth remained flat during this period.
"The textiles exports trend in the first two months have been slow compared to the last year, yet the industry is pinning hopes on the recent announcements in the FTP, rupee depreciation and new markets," Dhingra said.
The exporters are exploring new markets like Latin America, Russia, Japan and Africa to reduce dependence on traditional markets like the US and Europe.
The US and Europe comprise 65 % of the country's total textiles exports.
During 2011-12, India's textiles exports touched $34 billion compared to $26 billion in the previous year.
Earlier, the industry has been clamouring over high raw- material prices, high interest rates, besides demand slowdown in its major markets.
To help the cash-starved industry, the government has announced the restructuring of debt worth Rs 35,000 crore to bail out the textile mills.
The sector was hit hard by a sharp fall in cotton yarn prices and poor domestic and global demand. Textiles units were facing difficulty in repaying term loans.