Grasim Industries, the Aditya Birla Group flagship, has announced a second phase of investment in lyocell manufacturing at its Harihar facility in Karnataka, committing Rs 3,094 crore to add 110,000 tonnes per annum of new capacity.
The announcement signals the company’s intent to become one of the largest producers of the sustainable fibre globally, and pushes its overall cellulosic staple fibre capacity past the one million tonne mark by the end of the decade.
What is being built
The Phase II expansion will come up as two production lines of 55,000 TPA each at Harihar. The first line is targeted for commissioning in 2028, with the second following in 2030. This is in addition to Phase I, a 55,000 TPA lyocell plant already under construction at the same site, which is expected to go on stream by mid-2027.
When all three lines are operational, Grasim’s total lyocell capacity will stand at approximately 210,000 TPA. The company has positioned this as a significant milestone in India’s emergence as a manufacturer of advanced textile inputs.
Lyocell is a wood pulp-derived fibre made through a closed-loop process that recaptures solvents, giving it a lower environmental footprint than viscose or cotton, with end-use applications spanning apparel, home textiles and technical segments. The brand Tencel, made by Austrian company Lenzing, is among the more widely recognised lyocell products in global markets.
Demand for the fibre has grown as brands and retailers respond to sustainability requirements from both regulators and consumers, particularly in Europe and North America.
Birla’s rationale
Kumar Mangalam Birla, Chairman of the Aditya Birla Group, framed the investment in the context of India’s industrial ambitions. “This investment carries forward that legacy. It is a vote of confidence in the scale and promise of the Indian market, aligns closely with the aspirations of Make in India, and will help position India as a more competitive and resilient force in the global textile industry,” he said in a statement.
He added that the expansion would take Grasim’s overall cellulosic fibres capacity beyond one million TPA, reinforcing the group’s position in what it terms man-made cellulosic fibres, an umbrella category that includes viscose, lyocell, modal and recycled fibre variants.
Shifting the product mix
A notable element of the announcement is what it implies for Grasim’s business composition. The company said its speciality portfolio, lyocell, modal, dope-dyed and recycled fibres, would account for 35% of total fibre output by 2030, up from current levels. Higher-value products in this segment command better realisations than standard viscose staple fibre, which has historically been the core of Grasim’s fibre business and is subject to commodity pricing cycles and competition from Chinese producers.
Vadiraj Kulkarni, Business Head of Grasim Pulp & Fibre, said the expansion was about more than scale. “By expanding lyocell capacity, we are accelerating the shift towards high-performance fibres with a lower environmental impact. Lyocell enhances our product mix, supports premium applications, and aligns with our focus on delivering differentiated, sustainable solutions to global markets,” he said.
Scale in context
If the capacity targets are met, Grasim’s 210,000 TPA of lyocell would make it a significant player in a global market currently dominated by Lenzing, which operates lyocell plants in Austria, the United States and China. Building large-scale lyocell production in India, where fibre is then processed closer to the textile manufacturing base, could offer logistics and cost advantages for domestic downstream customers.
The Harihar site in the Davangere district of Karnataka has been Grasim’s primary fibre manufacturing hub and the choice of location for both phases of the lyocell expansion is consistent with that concentration of infrastructure and workforce at a single large campus.