The decision to set up the trade centre and the museum was proposed in the Budget for 2014-15 presented by Finance Minister Arun Jaitley in June.
Rs 50 crore have been earmarked in the budget for development and promotion of handloom products of Varanasi, an ancient city which has rich heritage in the sector.
During the two-day visit, Modi will also discuss the plan of adopting a village from his constituency under the MP Model Village Scheme.
He will also visit Banaras Hindu University (BHU) where he will inaugurate a Trauma Centre.
Earlier, the Prime Minister was expected to visit Varanasi on October 14 and 15 but it was postponed due to cyclone 'Hudhud'.
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