CMAI Presents Budget Recommendations To Strengthen India’s Garment Sector

The Clothing Manufacturers Association of India (CMAI) has submitted key recommendations to the Union Government in anticipation of the Union Budget 2025-26, aiming to bolster the growth and sustainability of India’s vital garment sector. The garment industry, a significant contributor to India’s economy, employs over 11 million people, predominantly in the MSME sector, and plays a pivotal role in creating employment opportunities, particularly for women and marginalized communities.
Among the recommendations put forth, CMAI has called for the introduction of interest subvention benefits for the domestic garment sector, similar to those provided to agriculture, to alleviate financial challenges and ease the burden of high working capital requirements.
Additionally, CMAI has advocated for the recognition of MSMEs in the garment sector as secured creditors in NCLT cases, ensuring financial security and fair treatment during insolvency processes. This would provide much-needed protection to MSME vendors, who often suffer from delayed payments and unpaid dues.
A significant proposal is the extension of the Production Linked Incentive (PLI) Scheme to the garment sector, which is currently excluded from the existing textile-focused PLI. By including garments, the scheme can unlock massive export potential, help India capture a larger share of global apparel markets, and level the playing field against countries like Bangladesh and China, which currently enjoy competitive advantages. CMAI has also suggested lowering the PLI investment threshold for garments to attract more investments and boost employment.
Furthermore, CMAI has urged the withdrawal of the 43B(H) clause of the Income Tax Act, which has inadvertently caused financial strain on MSMEs by imposing unrealistic payment terms. The association has recommended a phased reduction in payment cycles over three years to allow garment manufacturers to adapt.
Finally, CMAI has highlighted concerns over duty-free imports from Bangladesh, which have significantly impacted the domestic garment industry, particularly in categories like innerwear, denims and woolen garments. CMAI has recommended review of the Free Trade Agreement (FTA) with Bangladesh to ensure fair competition and suggested that duty-free imports be permitted only for garments made from Indian fabrics.
These recommendations aim to nurture a more robust and competitive garment sector, ensuring its continued contribution to India’s economic growth and employment generation.