Budget 2026: Rs 1,700 Cr PMFME Push and Integrated Textiles Programme to Revive MSME Clusters

Budget 2026 has raised the allocation for the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME) to Rs 1,700 crore from Rs 1,500 crore, while launching an Integrated Textiles Programme with a five-component framework for apparel, fabric and artisan clusters.

The combined measures focus on micro and small enterprises in food processing and textiles, two of the largest employment-generating manufacturing segments in the country.

PMFME support for micro food processors

Under PMFME, micro food processing units are eligible for a credit-linked capital subsidy of 35 per cent, capped at Rs 10 lakh per unit, for projects of up to Rs 25 lakh.

The scheme supports enterprises such as pickle and snack manufacturers, spice processors and millet-based units. In addition to plant and machinery support, PMFME provides seed capital of Rs 40,000 per self-help group member and assistance for branding and marketing.

Priority coverage continues for enterprises promoted by self-help groups, farmer producer organisations and entrepreneurs from aspirational and backward districts. Common infrastructure facilities such as cold storage, testing laboratories and processing centres are also supported, with subsidy of up to 35 per cent and a ceiling of Rs 3 crore per project.

According to Budget estimates, the revised allocation enables the addition of more than 20,000 new or upgraded micro units annually, with special focus on millet and makhana processing under district-level product specialisation initiatives.

Integrated Textiles Programme and cluster modernisation

Budget 2026 has introduced a five-part Integrated Textiles Programme to modernise traditional and small manufacturing clusters.

The programme includes a natural fibre component to support domestic cotton and jute value chains, a textile expansion and employment scheme for powerloom and garment units, national handloom and handicraft programmes for artisan clusters, development of integrated mega parks with common processing and testing facilities, and new infrastructure and skill centres in tier-II and tier-III locations.

Machinery modernisation for textile MSMEs will continue to be supported through the Amended Technology Upgradation Fund Scheme (ATUFS), for which Rs 635 crore has been provided in the Budget, alongside Rs 1,148 crore under the production-linked incentive programme for textiles.

The textile measures are intended to upgrade more than 1,000 clusters covering powerloom units, garment stitching centres, dyeing and processing units and handicraft groups.

Focus on women and socially disadvantaged entrepreneurs

PMFME continues to prioritise self-help group enterprises, where participation is predominantly by women, while textile cluster programmes focus heavily on handloom and handicraft segments in which women constitute a large share of the workforce.

The combined food processing and textile interventions are expected to support rural and peri-urban employment and expand enterprise participation among Scheduled Caste and Scheduled Tribe entrepreneurs through higher outreach and capacity-building support.

Market access and compliance support

Food processing MSMEs supported under PMFME are expected to benefit from subsidised testing and certification through agencies such as the Food Safety and Standards Authority of India and export facilitation through the Agricultural and Processed Food Products Export Development Authority.

Textile and apparel MSMEs will be linked to domestic and export markets through cluster-level marketing support and common processing and compliance infrastructure located within the proposed parks and cluster facilities.

Conclusion

Budget 2026 combines a higher PMFME outlay of Rs 1,700 crore with a new, multi-component textiles framework to strengthen two labour-intensive MSME sectors. The focus on capital subsidy, shared infrastructure and market-linkage support is aimed at improving formalisation, productivity and export readiness of micro and small enterprises operating in food processing and textile clusters across the country.