The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces several key measures aimed at stimulating economic growth, supporting the middle class, and enhancing various sectors. After much anticipation, the country’s middle class has gotten what it craved for years- income tax reliefs. With now there being no tax on income up to Rs 12 lakh, Finance Minister Nirmala Sitharaman has attempted to lay a foundation for a more consumption-driven economy. With increased disposable incomes, growth opportunities for the fast-moving consumer goods (FMCG) sector galore, going ahead.
- India gives tax relief to boost spending power of middle class
- Fiscal deficit for 2025-26 seen at 4.4% from 4.8% this year
- Missions to boost farm productivity, manufacturing, exports
- FDI limit in insurance sector raised to 100% from 74%
FOCUS ON FARM, MANUFACTURING AND FINANCIAL SECTOR
India has faced a bout of high food inflation over the past year due to weather changes impacting output. To boost productivity across the farm sector, the government will launch a national mission to push high-yielding crops, with a special focus on pulses and cotton production.
With the newly introduced tax reliefs, the biggest aspect that is expected to drive the economy is the increase in disposable incomes. The experts believe that as people will now have more money in their pockets, they will look to spend it to meet not only their consumption need but also their luxury needs.
The government’s continued push for domestic manufacturing under ‘Make in India’ and support for MSMEs will strengthen the foundation of homegrown brands, fostering self-reliance and global competitiveness. With policies aimed at increasing disposable income and supporting the middle class, we expect a positive impact on demand.
The Centre introduced ‘Mission for Cotton Productivity’. This five-year mission will facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties. The FM stated that best of science and technology support will be provided to farmers.
The mission for cotton productivity initiative will empower cotton farmers to improve production, sustainably. Further, special emphasis on boosting domestic production of textiles through different initiatives is a significant step towards strengthening Make in India mission.
OUTLINES FOR BUDGET 2025
- Mission for Cotton Productivity: The government’s five-year mission to boost cotton productivity will provide significant relief to cotton farmers by focusing on extra-long staple cotton varieties. With advanced scientific and technological support, this initiative aims to increase farmers’ income and ensure a consistent supply of high-quality cotton, strengthening India’s traditional textile sector.
- Extended Exemptions on Textile Machinery: The conditional exemptions on BCD for importing textile machinery parts have been extended until 31st March 2027. This will allow textile manufacturers to benefit from more affordable machinery, enhancing the industry’s growth prospects.
- Boost for Agro, Medical, and Geo-Textiles: The exemption of import duties on advanced shuttle-less looms for agro-textiles, medical textiles, and geo-textiles will promote innovation and production in these specialized textile categories, paving the way for new opportunities.
- Increased Credit Guarantee for Micro Enterprises: The expansion of credit guarantee cover for micro-enterprises will open up an additional ₹1.5 lakh crore in credit over the next five years, empowering small players in the textile industry to grow and thrive.
- Support for MSMEs, especially the Micro Sector, through increased upper limits
- Boost to domestic manufacturing and exports with policies enhancing global competitiveness and Ease of Doing Business.
- Lowering of Basic Customs Duties on textile machinery, encouraging modernization and efficiency.
Consumption-Side Measures:
- Lower income tax rates, anticipated to increase disposable income, driving consumer demand.
- Changes in TDS and TCS limits, further stimulating consumption and market expansion.
Industrys Feedback:
The Clothing Manufacturers Association of India (CMAI) appreciates the Union Budget 2025-26, acknowledging its significant support for the MSME-driven apparel sector. CMAI remains optimistic that these initiatives will strengthen the domestic apparel industry, ensuring its sustained growth and competitiveness in both domestic and international markets.
“The Confederation of Indian Textile Industry (CITI) welcomes the Union Budget 2025-26, highlighting a 57.7% increase in textile allocation, driven by an additional ₹1,148 crore under the PLI scheme. The launch of the Mission for Cotton Productivity, which aims to enhance cotton yield and reduce import dependency on extra-long staple (ELS) cotton. The budget also includes initiatives such as tariff revisions for knitted fabrics, exemptions for shuttle-less looms, and an Export Promotion Mission, all aimed at making India’s textile industry globally competitive and technology-driven. A special focus on MSMEs, which contribute 45% of textile exports, includes enhanced credit availability. However, we urge the government to introduce upfront capital subsidies and performance-based incentives to further accelerate growth.
Rakesh Mehra, Chairman, CITI
“As we navigate the dynamic landscape of the textile industry, today marks a significant milestone. The recent announcement by Finance Minister Nirmala Sitharaman of the Mission for Cotton Productivity has sent ripples of optimism through the sector. This five-year initiative is poised to revolutionize India’s textile industry by enhancing the production of Extra Long Staple (ELS) cotton, a move that will significantly improve the quality and competitiveness of our textile products globally. The Finance Minister’s emphasis on promoting ELS cotton varieties underscores the government’s unwavering commitment to bolstering this vital sector. The market has responded positively, with textile stocks surging on February 1.
JASVEEN KAUR, SENIOR DIRECTOR, NEWTIMES DEVELOPLMENT
“The steps taken by the government towards establishment of Export Promotion Mission, creation of a unified digital platform BharatTradeNet to streamline export documentation and finance issues, support to MSMEs by facilitating easier access to credit by enhancing credit guarantee cover and setting up national centers of excellence for skilling etc. will drive India’s manufacturing and export growth story.”
Mithileshwar Thakur, Secretary General AEPC.