Reimagining revival of the textiles sector

If the India-EU trade deal was being hailed as the “Mother of all deals”, then the India-U.S. trade deal is being considered as the“Father of all deals”, especially for the textile sector. The US is one of the largest markets for textiles, with exports valued at around USD 118 billion, and it buys around 28-33 per cent of Indian textile and apparel exports. For such a large market, cutting effective tariffs from 50 to 18 per cent is a significant development, giving India an advantage over competing countries. India’s textile sector has always been more than a manufacturing industry.

It is a lifeline for farmers, a source of mass employment, and a bridge between rural India and global markets. With their well-integrated supply chains and labour-intensive nature, textiles play a central role in India’s development journey and in our ambition to build an inclusive, export-driven economy. In recent years, this sector has been tested by global trade disruptions. One of the most significant challenges came with the imposition of high tariffs by major markets on a range of textile and apparel products.

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Instead of reacting defensively or resorting to short-term controls, India, under the leadership of Prime Minister Narendra Modi, chose a calibrated and strategic response by scaling up and upskilling through the PM MITRA (Mega Integrated Textile Region and Apparel) Parks and SAMARTH scheme, through which 5.4 lakh people have already been trained with industry-relevant skills. This was a rapid response, but it has not always been like that. During the UPA decade, the government watched from the sidelines as other competitors stitched up market access and duty-free regimes in the European Union. While others moved aggressively to secure preferential entry into key markets, India lost valuable time. The consequences of this inaction were visible for years.

Exporters operated at a disadvantage, price competitiveness suffered, and opportunities in high-value markets remained underutilised. It is precisely to address this gap that the trade deals with the U.S. and the EU matter a lot. The European Union, along with the U.S., is one of the world’s most significant and valuable textile and apparel markets. Under the proposed India-EU FTA, the objective is clear: to secure phased or zero-duty access for Indian textiles and apparel. This will directly neutralise the long-standing advantage enjoyed by competitor countries that have benefited from preferential regimes, restoring a level playing field for Indian manufacturers.

The proposed Free Trade Agreement with the EU and the trade deal with the U.S. will deliver its most substantial gains in India’s core textile-producing regions. States such as Tamil Nadu, which form the backbone of the country’s textile and apparel exports, stand to benefit significantly. In particular, the tri- city cluster of Coimbatore–Erode-Tiruppur – a globally recognised hub for spinning, knitting, and garment manufacturing – will gain from improved market access and enhanced exported competitiveness. The U.S. trade deal can double Tirupur exports to U.S. markets from Rs 14,000 crores to Rs 28,000 crores in three years. Reinforcing this momentum, the Union Budget 2026-27 has announced the creation of a City Economic Region for the tri-city cluster.

This move integrates trade opportunities with regional industrial planning, enabling infrastructure upgrades, logistics efficiency, and coordinated urban-industrial growth. Together, the trade deals and the City Economic Region framework ensure that global market access translates directly into local jobs, stronger MSMEs, and sustained industrial expansion in one of India’s most critical textile ecosystems. The National Fibre Scheme announced in the budget anchors this approach by promoting self-reliance in silk, wool, jute, and artificial fibres.

By reducing import dependence and strengthening upstream supply chains, it positions India as a more resilient and integrated textile ecosystem. Complementing this, the Textile Expansion and Employment Scheme focuses on upgrading traditional clusters to retain their labour-intensive character while becoming technologically modern and globally competitive. Announcement of capital support for machinery upgradation, testing, and certification facilities will directly improve productivity and ensure compliance with quality standards. For exporters, this means easier access to demanding international markets. For workers, it translates into safer workplaces, higher productivity, and better wages.

For rural and semi-skilled labour, it creates stable employment opportunities closer to home. The launch of SAMARTH 2.0 strengthens this framework by aligning skills with industry needs, ensuring that workforce availability keeps pace with export-grade manufacturing requirements. Handloom and handicraft schemes have also been brought under a unified framework, ensuring that artisans and weavers remain integral to India’s growth story rather than peripheral to it. A key emphasis of this budget is the modernisation of traditional textile clusters, which have long underpinned India’s textile economy. While these hubs have historically generated large-scale employment, many have remained technologically outdated.

By addressing this gap, the government is not only enhancing competitiveness but also preserving the employment-intensive nature of these clusters. Taken together, the recent series of Trade Agreements and the Union Budget mark a fundamental shift in governance philosophy. The Union Budget 2026–27 offers a strong and coherent roadmap for the textile sector. The allocation of Rs 5,279.01 crore to the Ministry of Textiles reflects a clear shift towards building long-term competitiveness rather than relying on short-term relief or fragmented interventions. Under Prime Minister Modi, India’s textile strategy has moved from defensive reactions to a coordinated trade-industrial policy.

The objective is clear – that India is here not just to catch up with competitors, but to outgrow them through scale, sustainability, and strategic trade alignment. The export base of textiles and apparel stood at around USD 37.75 billion in FY25, more than double the 2013 level. The Ministry of Textiles’ Vision 2030 aims to scale India’s textile exports to Rs 9 lakh crore (about USD110 billion) by strengthening domestic manufacturing and systematically widening global market reach.

India’s textile industry stands at a critical inflexion point, backed by solid production fundamentals, rising exports, and sustained policy support, positioning it as a competitive, reliable, and future-ready global textile and apparel hub. Textiles are supported by strong production fundamentals, expanding international market access, and sustained policy backing – positioning it as a competitive, reliable, and future-ready global textile and apparel hub.

(The writers are, respectively, National Spokesperson of BJP, and a public policy analyst.)