India aims to boost its textile and garments industry in next monthâs budget with financial support, tariff cuts on key inputs and incentives to produce locally, two government sources said.
An ongoing political crisis in neighbouring Bangladesh, has prompted global retailers to explore alternatives, including India, for garment imports, exporters told Reuters.
âIndian exporters are finding it difficult to meet the rush of export orders in last few months as many US companies are looking for alternative suppliers,â said Mithileshwar Thakur, secretary general at Indiaâs Apparel Export Promotion Council.
Indiaâs textile sector employs an estimated 45 million people and the government is considering increasing the textile ministryâs budget allocation for 2025/26 by 10-15 percent, from the current 44.17 billion rupees ($511 million), said a government source privy to discussions.
The government may also raise the allocation for production-linked incentives for the textile sector to around 600 million rupees from 450 million rupees for the current fiscal year, the source said.
Under this scheme, the government offers tax incentives and other concessions to companies choosing to manufacture locally.
Tariff cuts on raw materials such as polyester and viscose staple fibre, along with textile machinery, are also under consideration, a second government source said.
Import tariffs are currently in the range of 11-27 percent on fibre, compared to almost nil duties in Bangladesh, impacting Indian garment exporters.
The sources requested anonymity as they are not authorised to speak to the media about discussions on Indiaâs annual budget, which is due to be announced on Feb. 1.
Indiaâs finance, commerce, and textile ministries did not respond to emails seeking comments.
Bangladesh Crisis
Bangladeshâs garment exports to the US fell by 0.46 percent to $6.7 billion between January and November last year, while Indiaâs exports rose 4.25 percent to $4.4 billion, data from the US Office of Textiles and Apparel showed.
Shahidullah Azim, a Dhaka-based factory owner whose clients include North American and European retailers, told Reuters that some American buyers have shifted their orders to India and Vietnam, due to ongoing crisis in Bangladesh.
In the first eight months of the fiscal year through November, Indiaâs textile and garment exports rose by more than 7 percent year-on-year to over $23 billion, compared to just 2 percent growth in total goods exports.
Readymade garment exports grew by more than 11 percent year-on-year, to near $10 billion during the same period, and are expected to cross $16 billion by March end, said Thakur at Indiaâs Apparel Export Promotion Council.
By Manoj Kumar and Ruma Paul; Editor: Alexander Smith
Learn more:
âEthicalâ Cotton Is Being Picked by Child Labourers in India, Watchdog Finds
A new report has linked businesses supplying companies including Zara-owner Inditex, H&M Group, Gap Inc. and Amazon to incidents of forced labour and debt bondage on Indian cotton farms.
