Supported by a Rs 1,943 crore allocation in the FY26-27 Interim Budget, Tamil Nadu is aggressively transitioning its textile economy from low-margin spinning to high-value technical manufacturing.
A cornerstone of this fiscal plan is the Rs 6 crore Advanced Quality Testing Laboratory at the South India Textile Research Association (SITRA) in Coimbatore. Announced on February 17, 2026, this facility serves as a critical infrastructure upgrade to de-risk the state's entry into the $300 billion global technical textile market. By providing indigenous certification for medical and performance-grade fabrics, the state aims to help manufacturers bypass expensive overseas testing. Thangam Thennarasu, Finance Minister, confirms, this initiative aligns with the ‘Tamil Nadu Integrated Textile Policy 2025-26,’ which prioritizes man-made fiber (MMF) diversification to insulate the sector from the chronic price volatility of the global cotton trade.
Energy subsidies and infrastructure to neutralize global headwinds
To maintain a competitive edge against regional rivals like Vietnam and Bangladesh, the budget introduces an Rs 18,091 crore Integrated Renewable Energy Policy designed to lower the ‘power-per-garment’ cost for mills. This energy security is paired with the rapid development of the 1,052-acre PM MITRA Park in Virudhunagar, which is on schedule for a September 2026 completion. The park has already secured 55 investment agreements totaling ₹915 crore, underscoring strong private sector confidence.
Despite a modest 0.1 per cent growth in national textile exports, Tamil Nadu’s core clusters - Tiruppur, Karur, and Erode - recorded a robust 11.4 per cent export growth in the preceding half-year. Addressing energy bottlenecks is the single most effective way to reclaim market share, states Durai Palanisamy, Chairman, Southern India Mills Association (SIMA), highlighting the state’s strategy to leverage its 33 per cent share of India's textile business toward a high-tech, sustainable manufacturing future.
Tamil Nadu Department of Handlooms and Textiles
The Tamil Nadu Department of Handlooms and Textiles acts as the statutory architect for India's premier textile hub, overseeing 46 per cent of the nation's spinning capacity. With an annual export footprint of $8.22 billion, it is currently managing the modernization of 1.9 million spindles and 8 lakh rotors. The agency’s 2026 roadmap focuses on scaling technical textile exports to meet the state's $1 trillion GDP objective by 2031.
