Industry Odisha Bureau, Oct 24: The government is considering a ₹40,000-crore plan to modernise traditional textile clusters. The programme would run over five years, two people familiar with the matter told Mint. Its goal is to make weaving, processing and garment units more efficient and cost-competitive.
The proposal is called the Textile Expansion and Employment (TEEM) Scheme. It was first announced in the Union Budget for 2026-27. The scheme is designed to be demand-driven and organised around clusters.
The expenditure finance committee has already examined the textiles ministry’s proposal. This inter-ministerial panel, led by the expenditure secretary, vets large spending plans. The scheme could go to the Union Cabinet soon, the people said. Funding and implementation details still await that approval.
The textiles and garment sector is worth about $179 billion. It is India’s second-largest employer after agriculture. The industry contributes 11% of manufacturing gross value added. It also accounts for more than 8% of India’s goods exports.
Under TEEM, clusters are likely to receive capital support for machinery and technology upgrades. Common testing and certification centres could also be funded. Shared facilities help smaller units meet buyer standards without heavy individual spending. Experts said well-targeted support could lift productivity and exports.
The list of clusters has not been finalised. Possible candidates include Tiruppur, Coimbatore, Surat, Ahmedabad, Varanasi, Bhiwandi, Ludhiana and Kanchipuram.
Knitwear exporter Raja Shanmugam, a former Tiruppur exporters’ association president, stressed worker welfare. He suggested housing, schooling and medical facilities, especially for migrant workers. He also proposed common effluent treatment plants to control pollution. Shared research centres could help designs keep pace with overseas buyers, he said.
TEEM would sit alongside other budget measures for the sector. These include support for natural fibres, handlooms, handicrafts and textile parks. Mint has reported a separate ₹25,000-crore, five-year skilling drive under Samarth 2.0.
The plan is part of a broader push to grow garment manufacturing and exports. India wants to capitalise on its trade agreements with the UK and European Union. The India-UK agreement took effect in July, according to Mint. The India-EU pact is likely to come into force in early 2027.
The EU currently charges duties of up to 12% on Indian textiles, depending on product. Bangladesh enjoys duty-free access as a least developed country, industry executives said. Shanmugam said EU buyers have begun placing advance orders with Tiruppur firms. Some are looking to replace suppliers in Turkey, Portugal and Greece, he added.
India aims to raise textile and garment exports to $100 billion by 2030. Textiles minister Giriraj Singh has said India’s 15 trade pacts cover a $198-billion market. Indian exports to these markets currently stand at just $11.5 billion.
Whether TEEM narrows that gap will depend on its final design and rollout.
