In the Union Budget 2026-27, Finance Minister Nirmala Sitharaman announced capital support for machinery, technology upgradation, and the establishment of common testing and certification centres to modernise traditional textile clusters.

The government will set up "Mega Textile Parks in challenge mode" to provide integrated infrastructure, scale efficiencies, and value addition, an official statement said.

These parks will also support growth in technical textiles, a high-potential segment critical for industrial, medical, defence, and infrastructure applications.

Further, an integrated Programme for the Textile Sector with five sub‑components, including a National Fibre Scheme, a Textile Expansion and Employment Scheme, a National Handloom and Handicraft Program, a Tex‑Eco Initiative, and Samarth 2.0 for skilling, was announced in the Budget.

Samarth 2.0 is an upgraded skilling programme to modernise the textile skill ecosystem through deeper collaboration with industry and academic institutions, ensuring the availability of industry-ready skilled manpower across the value chain.

A statement from the Ministry of Textiles also highlighted measures to strengthen khadi, handloom, and handicrafts through the launch of the Mahatma Gandhi Gram Swaraj Initiative, focusing on global market linkage, branding, streamlined training, skilling, and process modernisation.

"It will benefit weavers, village industries, rural youth, and support the One District One Product (ODOP) initiative," it said.

The government also announced an extension of the export obligation period from six months to 12 months for exporters using duty‑free imported inputs in textile garments, leather garments, and synthetic footwear.

This measure will provide greater operational flexibility, ease of compliance, and improved working capital management for exporters.

Textile MSMEs will enjoy more liquidity through Trade Receivables Discounting System (TReDS) reforms such as mandatory use by CPSEs, credit guarantee support, linking GeM with TReDS, and introducing TReDS receivables as asset‑backed securities, the Ministry said.

A dedicated Rs 10,000 crore SME Growth Fund has been introduced to create future champions, incentivising enterprises based on select criteria, it added.