Budget 2026: Textile Revival and Rs 10,000 Cr SME Fund

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TL;DR: Budget 2026 backs textiles with the National Fiber Scheme, cluster upgrades, SAMARTH 2.0 and sustainability drives.
A Rs 10,000 Cr SME Growth Fund plus TReDS reforms aim to boost MSME liquidity, financing and scaling.

What Budget 2026 means for textiles and MSMEs

The Union Budget 2026 delivers a coordinated package aimed at revitalising India’s textile value chain and strengthening micro, small and medium enterprises (MSMEs). Central announcements include the National Fiber Scheme to boost self-reliance in fibres and a dedicated Rs 10,000 Crore SME Growth Fund to create future champions in manufacturing and exports.

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Major textile initiatives

The textile roadmap is an integrated programme with five components designed to enhance competitiveness, sustainability and employment. Highlights include the National Fiber Scheme for natural and new-age fibres, the Textile Expansion and Employment Scheme for cluster modernisation and capital support, a National Handloom and Handicraft Program to consolidate support for artisans, the Tex-Eco Initiative for sustainable production, and SAMARTH 2.0 to modernise skilling through industry-academia collaboration. The Mahatma Gandhi Gram Swaraj Initiative will strengthen khadi, handloom and crafts by improving branding and global market linkages.

Key MSME measures

MSMEs will see targeted support through rejuvenation of 200 legacy industrial clusters, infrastructure upgrades, technology adoption and new financing instruments. The Rs 10,000 Crore SME Growth Fund aims to incentivise high-potential enterprises, while the Self-Reliant India Fund receives a Rs 2,000 Crore top-up to maintain access to risk capital for micro and small businesses.

Liquidity and TReDS reforms

To tackle working-capital constraints, the Budget introduces four transformative reforms for the Trade Receivables Discounting System (TReDS):

• TReDS will be mandated as the transaction settlement platform for all purchases from MSMEs by Central Public Sector Enterprises (CPSEs), setting a benchmark for other corporates.
• A credit-guarantee support mechanism via CGTMSE will back invoice discounting on TReDS to reduce financier risk and lower borrowing costs.
• The Government e-Marketplace (GeM) will be linked with TReDS to share procurement data with financiers, enabling faster and cheaper financing for sellers.
• TReDS receivables will be structured as asset-backed securities, creating a secondary market and improving liquidity and settlement efficiency.

Why this matters

The combined policy push on fibres, cluster modernisation, skilling and finance can accelerate export growth, create jobs and make Indian textiles globally competitive. For MSMEs, the reforms clear a path toward faster payments, better access to working capital and stronger support for scaling operations.

Practical next steps for MSMEs and textile units

• Assess eligibility for cluster modernisation support and draw up a capital plan for machinery and technology upgrades.
• Register on GeM and explore TReDS platforms to shorten receivable cycles and improve cash flow.
• Engage with SAMARTH 2.0 and other skilling initiatives to build workforce capabilities aligned with modern manufacturing.
• Prepare to compete for incentives from the SME Growth Fund by improving governance, scalability and export readiness.

For an accessible overview of these measures and their implications, consult the Budget 2026 updates for SMEs and the textiles sector. To position your business alongside broader industry trends in textiles and Indian MSMEs, review sector analysis and demand patterns. If you want step-by-step assistance on policy uptake and compliance, explore guides on how to leverage government schemes in Budget 2026 for SMEs.

Conclusion

Budget 2026 combines targeted fiscal support, finance market reforms and skilling to provide a real opportunity for textile firms and MSMEs to scale. Businesses that act quickly—upgrading processes, linking to digital procurement and financing platforms, and investing in skills—will be best placed to capture growth under the new policy framework.

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