India Budget 2025: Retailers expect measures to boost textile demand

The Indian textile and garment industry is facing headwinds due to slow demand in both global and local markets. Retail brands have advocated for measures in the Union Budget 2025-26 to spur demand and foster growth in the sector. The industry expects income tax reforms to ease the financial strain on the middle class, targeted tax incentives to boost the rural market, rationalisation of GST rates, subsidies on raw materials and machinery, and tax breaks for MSMEs and startups. Industry leaders anticipate that Union Finance Minister Nirmala Sitharaman will introduce measures in the Union Budget to support the MSME sector, promote job creation, enhance skill development, and streamline tax structures.

Nishant Poddar, chief marketing officer & head of retail experience at Universal Sportsbiz Pvt. Ltd. (WROGN), said, “The Union Budget introduces a range of measures that could assist the retail sector, particularly the fashion industry. The proposed income tax reforms are a welcome move to ease the financial strain on the middle class. With more disposable income, consumers are likely to spend more freely, boosting foot traffic and sales in stores. This creates an excellent opportunity for retailers to highlight value-driven and aspirational products that cater to this renewed sense of financial confidence.”

The Indian textile, garment, and retail sectors anticipate the Union Budget 2025-26 to boost growth through tax reforms, GST rationalisation, and MSME support.
Key focuses include rural incentives, sustainable practices, domestic manufacturing, and digital growth.
Industry leaders see opportunities in affordability, innovation, and exports for robust, inclusive progress.

He stated, “Rural markets are emerging as a significant growth area, and the targeted tax incentives for their development could be a game-changer. For retailers, this is an invitation to expand beyond urban strongholds. Tailoring inventory to regional preferences and enhancing digital outreach will be key to tapping into this burgeoning market.”

He argued that a reduction in GST rates on mass-consumption products, including apparel, has the potential to drive demand. Lower prices will attract a broader customer base, especially in the entry-level and value segments. For retailers, this presents an opportunity to refine pricing strategies and boost volume sales, making fashion more accessible to everyone. The government’s focus on regulating quick commerce practices is a step in the right direction. By promoting ethical and sustainable operations, this move ensures fair competition across the retail ecosystem. For us, it’s an opportunity to recalibrate our strategies to balance speed, quality, and customer satisfaction.

Poddar said that the expansion of the Production Linked Incentive (PLI) scheme to consumer goods could have far-reaching effects. By bolstering domestic manufacturing and reducing reliance on imports, this policy supports the availability of affordable, locally made products. For retailers, it’s a chance to promote the ‘Made in India’ story while meeting growing consumer demand with competitive offerings.

The Union Budget lays a promising foundation for the retail industry’s growth. By focusing on affordability, rural development, and sustainable practices, we can align our strategies with evolving consumer needs. The future of retail is brimming with potential, and with thoughtful planning, we can maximize these opportunities to create a stronger, more inclusive retail ecosystem.

Satyen Momaya, CEO of retail brand Celio India, commented on the expectations for the Indian Union Budget 2025-2026, “The retail sector has immense potential to drive India’s growth and employment. To harness this, we urge the government to boost consumer demand by reducing individual income tax and interest rates. The apparel and lifestyle retail segment, impacted by subdued demand over the last 12-18 months and inflation, would greatly benefit from retaining the current GST slabs, especially for products priced at ₹1,000 and above.”

He said, we also anticipate the swift implementation of a National Retail Policy to streamline operations and foster long-term growth. These measures will enable the retail sector to contribute meaningfully to economic progress and job creation across the country.

Radhika Koolwal, co-founder of home décor company Urban Space, commented, “As we approach the Union Budget 2025, the home décor industry is optimistic about measures that can bolster growth and innovation in the sector. We hope for policies that incentivise domestic manufacturing, such as subsidies on raw materials and machinery, along with tax breaks for MSMEs and startups. A reduction in GST rates on home furnishings and decor items would be a significant step toward making quality products more accessible to the growing middle class.”

“Additionally,  we expect initiatives that encourage sustainable practices, such as tax benefits for brands adopting eco-friendly production processes and using sustainable materials. Expanding financial support for digital infrastructure and e-commerce platforms will further empower businesses like Urban Space to enhance customer experiences and reach underserved markets. Investments in infrastructure, urban housing development, and affordable housing schemes will also be instrumental in spurring demand for home décor. Moreover, we look forward to enhanced export incentives, which can help Indian brands compete globally and showcase our designs on the international stage,” Koolwal said.

Shamsher Dewan, senior vice president and group head (Corporate Ratings) at credit rating agency ICRA Limited, said, “The domestic textile industry has been on a gradual recovery path over the last year following a challenging phase of sluggish global demand, supply chain issues, and competition from neighbouring countries. Gradual liquidation of retail inventory in end markets and a shift in global sourcing to India have supported apparel exports in fiscal 2024-25, while domestic demand remained subdued. The Union Budget is expected to focus on measures supporting the MSME sector, job creation, skill development, tax rationalisation on inputs, etc. Proposals around favourable financing terms for investments in value-added products will enhance the players’ competitiveness.”

Fibre2Fashion News Desk (KUL)

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