Uttar Pradesh to overhaul handloom and textile infrastructure with $556 mn budget allocation

In a decisive move to challenge established textile clusters in Southern India, the Uttar Pradesh government Department of Handloom and Textiles has earmarked approximately $556 million in its FY2026-27 budget to overhaul the handloom and textile infrastructure. With a five-fold increase over previous fiscal cycles, this allocation signals the state’s ambition to evolve from a traditional weaving center into a vertically integrated apparel powerhouse. A substantial Rs 44.23 billion is directed toward the Atal Bihari Vajpayee Powerloom Bunker Vidyut Flat Rate Yojana, a strategic energy subsidy designed to slash production overheads and enhance the price competitiveness of local clusters against aggressive global imports.

Central to this industrial blueprint is the rapid development of the 1,000-acre PM MITRA Mega Textile Park on the Lucknow-Hardoi border, which is projected to mobilize Rs 10,000 crore in private investment. By linking financial outlays directly to a target of 30,000 new jobs this year, we are ensuring that fiscal growth translates into immediate social equity, said Suresh Khanna. State Finance Minister. While the sector grapples with volatile petrochemical costs for synthetic fibers, the UP Textile and Garmenting Policy 2022 provides a 25 per cent capital subsidy on plant and machinery, specifically targeting the manufacturing of technical textiles and high-performance man-made fiber (MMF) apparel. This fiscal package, combined with the state’s proximity to a vast domestic consumer base, positions Uttar Pradesh as a critical alternative to traditional manufacturing hubs amidst shifting global supply chains.

The Uttar Pradesh Department of Handloom and Textiles oversees the state’s mission to become India's premier textile destination. Focusing on MSMEs, power looms, and mega-parks, it aims to attract Rs 10,000 crore in investments by 2027. Recent performance highlights include the revitalization of legacy clusters in Gorakhpur and Lucknow.