India is set to enhance its textile and garment sector in the upcoming national budget, aiming to provide financial support, reduce tariffs on key materials, and introduce incentives for local production. This move comes in response to the ongoing political instability in neighboring Bangladesh, which has prompted global retailers to explore other sourcing options, including India.

With the disruption in Bangladesh’s textile exports, especially to the U.S., many American companies are turning to India to fulfill their garment needs. ".

The Indian government is considering a 10-15% increase in the textile ministry's budget for 2025/26, which currently stands at 44.17 billion rupees ($511 million). There is also potential for an increase in production-linked incentives, from 450 million to 600 million rupees, to encourage companies to manufacture domestically. These schemes offer tax breaks and other concessions to businesses that prioritize local production.

In addition to financial support, India is considering tariff cuts on raw materials like polyester, viscose staple fibre, and textile machinery, which currently face import duties ranging from 11-27%. This compares unfavorably to Bangladesh, which enjoys minimal tariffs on similar imports.

The political instability in Bangladesh has caused a decline in its garment exports, which fell by 0.46% to $6.7 billion between January and November last year. In contrast, India saw a 4.25% increase in textile exports, reaching $4.4 billion during the same period. Additionally, India’s overall textile and garment exports surged by 7% in the first eight months of the fiscal year, with readymade garment exports rising by over 11%.

With global buyers shifting to alternative suppliers like India and Vietnam, India’s textile exports are expected to exceed $16 billion by the end of March, marking a strong growth trajectory in the sector.