Budget 2025-26: Cotton Mission gets a boost to improve productivity

The budget allocation for the textile sector saw a steep increase from the FY24-25 revised figure of Rs 3,342 crore to Rs 5,252 crore

Finance Minister Nirmala Sitharaman has announced an ambitious Rs 500 crore five-year plan to boost cotton production and promote extra-long staple cotton varieties, at a time when India has no surplus in cotton and its yield at 450-kilogram per hectare is one of the lowest, against a global average of 800- kilogram plus.

 

Named ‘Cotton Mission’, the scheme aims to rejuvenate India’s traditional textile sector, the minister said.

 

The budget allocation for the textile sector saw a steep increase from the financial year 2025 (FY25) revised figure of Rs 3,342 crore to Rs 5,252 crore, mainly for the Amended Technology Upgradation Fund Scheme and Production Linked Incentives (PLI), ensuring faster disbursement of incentive funds to the industry

 

 

“The budget also announced a flat 20 per cent or Rs 115 per kilogram import duty, whichever is higher, imposed on all knitted fabric HS codes. This means no scope for leakages, and any fabric below Rs 575 per kg would attract an import duty of Rs 115 per kg, which will stop undervalued fabrics from entering the country,” said Sanjay Kumar Jain, Managing Director of textile producer TT Ltd. The Finance Minister also added shuttleless looms to the import duty exemption list of technical textiles machinery.

 

The industry believes that this is a consumption-driven budget, with higher money in the hands of the middle class meaning more buying of apparel and home textiles. In addition to this, textiles being predominantly in the MSME segment with many women entrepreneurs, all schemes for their benefit would directly impact textile manufacturing.

 

“The Cotton Productivity Mission is a vital initiative to improve cotton yield in India from the current 450-500 kg per hectare to 1,000 kg per hectare. This five-year, time-bound mission, driven by advanced technology and scientific support, aims to boost farmer income and ensure raw material security for the Indian textile and apparel sector. Revisions in income tax slabs and exemptions are a positive step to boost consumption and economic growth. These measures, along with potential RBI rate cuts, will strengthen spending power and drive demand further,” said Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF).