Union Budget 2026 has made several significant add-ons for the textile industry. This is to enhance the competitiveness of the industry compared to Bangladesh. The central government has now announced programs for silk production, machinery support, handloom and handicraft programs, and beyond that, skill development for the textile sector.
The Budget emphasizes a strong policy framework for the labour-intensive textile sector, aiming to promote self-reliance, employment, innovation, and global competitiveness. The new measures will focus on inclusive growth, rural development, and export promotion, making textiles a key driver that will add to India’s economic growth.
Bangladesh’s textile industry has always posed a challenge to India’s domestic textile industry. As long as Bangladesh had an India-supported government, India tolerated this loss as a matter of being close neighbours with the country. However, the departure of the democratic government from Bangladesh has left the market with a vacuum.
Following this, India has begun to strategically redefine its bilateral relationship with Bangladesh. The Indian government’s Budget 2026–27 announced a strategy to make India’s textile market more attractive than Bangladesh’s.
Is Bangladesh’s textile market ahead of India?
Bangladesh’s clothing industry is export-oriented. While the domestic market is large, Bangladesh is the world’s second-largest exporter of ready-made garments. In 2024, Bangladesh exported $52.9 billion worth of garments. Since India exports both textiles and apparel, it ranks sixth in the list of exporters. In 2024, India exported close to a total of $37.7 billion in textiles, apparel, and handicrafts.
High-quality, affordable sports equipment
The Finance Minister launched an initiative to expand the apparel sector and make India a global hub for high-quality, affordable sports goods. He stated that a specific initiative has been proposed for sports goods, which will promote manufacturing, research, and innovation in equipment design as well as materials science.
Beyond that, other key announcements for the industry were:
National Fibre Plan – With the new Budget, India plans to include self-sufficiency for natural fibres like silk, wool, and jute, man-made fibres, and new-age fibres.
Textile Expansion and Employment Scheme – Textile Expansion and Employment Scheme to modernize traditional clusters with capital assistance for machinery, technology upgradation, and common testing and certification centres.
National Handloom and Handicrafts Programme – A National Handloom and Handicrafts Programme to integrate and strengthen existing schemes and ensure targeted support to weavers and artisans.
Tex-ECO Initiative – Tex-ECO initiative to promote globally competitive and sustainable textiles and clothing.
Samarth 2.0 – Launch of SAMARTH 2.0 to modernize and upgrade the textile skilling ecosystem through collaboration with industry and academic institutions. The objective is to modernize the textile ecosystem with sustainable practices. India aims to expand its garment sector to $100 billion by 2030. This requires capturing traditional markets and challenging existing competitors.
How India’s actions will impact Bangladesh’s apparel market
The new announcement comes at a time when the Bangladesh market is in crisis. Spinning mill owners have threatened an indefinite strike starting February 1, 2026, as cheap, duty-free yarn imports from India are putting pressure on their local production. This could lead to the closure of Bangladeshi textile mills. The new reforms that have been announced will focus on fibre self-sufficiency and expansion to make India stronger in the global market.
