A German-backed company is building a new cotton-spinning line in Manchester, to bring cotton spinning back to the spiritual home of the industry, thanks to worldwide demand for high-quality thread for the fashion industry. The new mill will use cutting edge technology to spin some of the most luxurious yarn in the world, using raw materials from Barbados, India, the US and Egypt. The yarn will be used in collections for the high-end fashion market.

English Fine Cottons is investing £4.8m of its own money in the project, £2m of which is a loan from the Greater Manchester Combined Authority (GMCA) through its investment fund. A further £1m has been awarded as a grant by the N Brown RGF6 Textile Growth Programme (TGP).

The TGP grant announced it is the largest ever single award from the programme. It means the new venture’s launch and growth plan for the next three years are fully funded.

English Fine Cottons will base its new production facility in the refurbished Tower Mill in Dukinfield in Tameside, Greater Manchester. The facility will be the UK’s only cotton-spinning company – reviving this iconic trade more than 30 years after the last cotton mills closed in the 1980s.

The company has already placed orders for key equipment and begun recruiting staff with a view to re-starting cotton spinning in the UK mid-2016. More than 100 new jobs will be created by the project.

Andy Ogden, general manager of English Fine Cotton’s parent company Culimeta-Saveguard, said that they are extremely proud to have won this major government grant today to help them make real their dream of bringing cotton spinning back to where it belongs – the North West of England.

There is a strong demand across the world for luxury goods with the ‘Made in Britain’ stamp, and English Fine Cottons has the pedigree for the job. Their roots are in technical textile manufacturing and they are in the perfect location – able to draw on a local workforce with the necessary skills and expertise.

Councillor Kieran Quinn is executive leader of Tameside Council and responsible for investment strategy and finance within the Greater Manchester Combined Authority (GMCA) said that the return of cotton spinning to Tameside is a matter of huge historical significance.

For more than 100 years cotton was the key industry in the various towns making up the borough and indeed the North West of England. The Park Road area of Dukinfield, where Tower Mill is situated, is a corridor of former cotton mills and testament to the hold spinning once had on the region.

The return of cotton spinning to Britain is part of a wider re-shoring trend in textile manufacturing, driven by a booming UK fashion industry. The TGP, which provides funding to textile manufacturing companies across England (excluding London), was set up to help UK companies take advantage of this opportunity.

The UK is the 15th-largest textiles maker in the world and exported £5.5bn worth of clothes in 2013. Cotton is still traded according to “Liverpool rules” set in the British port by the International Cotton Association and several traders are based there.