This is Modi's maiden visit to the city after becoming the prime minister.
"I believe in doing rather than making tall claims. You have expressed faith in me and showered me with love.
"I can assure the people of Kashi that I will never let them down and to the best of my abilities work for improving the living conditions of the poor and developing the region," said Modi who flew down Friday on a two-day visit to Varanasi, his parliamentary constituency.
Arriving in an air force chopper at the venue Bada Lalpur, the prime minister first went around a handicrafts exhibition where pottery, wooden toys, paintings, Banarasi sari, meenakari and carpets were at display.
Modi then laid the foundation stone of the Rs.200 crore Trade Facilitation Centre, spread over eight acres.
The centre would offer facilities from availability of raw material to sale and export facilities for the final product.
After seeing a model of the proposed centre, Modi suggested some changes to Minister of State for Textiles Santosh Gangwar.
He later laid the foundation of a Powerloom service centre and a crafts museum, which too will be part of the trade facilitation centre.
Addressing the gathering, the prime minister said this was a beginning of his dream for Varanasi.
Referring to the immense potential of handicraft in Varanasi and eastern UP, Modi said after agriculture, the textile sector offered the maximum employment.
Calling for tapping of this potential and using the craft strategically for availing the trade opportunities in the world, Modi said that while he will make no big announcements during his maiden visit to Varanasi and he would ensure that there is no dearth of funds for various projects which will be set rolling in the time to come.
He also stressed on the need of technology upgrade and assimilation of the e-business environment in their trade arena.
He was received at Babatpur airport by Uttar Pradesh Governor Ram Naik and Chief Minister Akhilesh Yadav. Modi had a brief chat with Yadav on the tarmac.