Karnataka's New Textile Policy Targets ₹20,000 Crore Investment, 5 Lakh Jobs by 2031
The Karnataka government has announced a new Textile and Apparel Policy for the period 2026 to 2031, aiming to attract ₹20,000 crore in domestic and foreign direct investment across the state's textile value chain over the next five years. The policy also sets a target of creating 5 lakh new jobs in the sector.
The policy was approved by the State Cabinet and introduced as part of the Chief Minister's 100-day campaign programmes, according to the government.
The government has said the investment and employment push will focus on Kalyana Karnataka and tier-2 and tier-3 cities. Kalyana Karnataka, comprising the districts of Bidar, Kalaburagi, Raichur, Koppal, Ballari and Yadgir, along with smaller urban centres, has historically received a smaller share of the state's industrial investment than the Bengaluru region.
Special emphasis has been laid on 34 taluks to promote new investment and generate employment. Industrial units located in these taluks will be eligible for additional incentives and concessions under the policy. The government has not yet set out the size of the individual incentives or the timeline for their disbursal.
In a significant change in scope, activities linked to silk yarn production — including silk reeling and silk spinning — have been brought within the ambit of the policy. Karnataka is among India's leading silk-producing states, and the inclusion of reeling and spinning is aimed at supporting earlier stages of the value chain, which have traditionally been handled by small and medium-sized units as well as household enterprises.
The policy lists several other objectives. These include strengthening local manufacturing systems, building global competitiveness to drive exports, improving market linkages, establishing a comprehensive skill development framework and creating state-of-the-art textile clusters.
Revitalising the handloom sector is another focus area, along with positioning Geographical Indicator (GI) products, setting up a Centre of Excellence and promoting sustainable practices.
Karnataka has a sizeable handloom and weaving base, and several of its textiles carry GI tags, including Mysore Silk, Ilkal sarees and Molakalmuru sarees. Officials have indicated that the emphasis on GI products is intended to help weavers and clusters secure better recognition and prices for region-specific weaves. The Centre of Excellence is expected to support design, testing and skill training, though its location and structure have not been announced.
The policy's five-year window from 2026 to 2031 means its performance will be measured mainly against investment inflows, employment generation and export growth over that period. How much of the ₹20,000 crore target comes from foreign direct investment, and how the 5 lakh jobs will be distributed across the state's districts, will depend on the detailed guidelines that follow the Cabinet's approval.
The announcement comes amid wider efforts by state governments to draw manufacturing investment away from established industrial hubs and into smaller districts, where land, labour and operating costs are typically lower. Textiles and apparel remain among the most labour-intensive manufacturing sectors in India, making them central to employment-focused industrial policies.
For now, the government's stated priorities are clear: investment in the textile value chain, jobs concentrated in the state's less industrialised regions, support for silk and handloom production, and a push towards exports and sustainable practices. The next step will be the release of operational details that determine which units qualify for what, and when.
