I have set android:textAllCaps=\"false\" in my android.support.design.widget.TabLayout thought it is showing the Tab Title in All caps only.
UPDATE FOR DESIGN LIBRARY 23.2.0+
The original answer doesn't work with design library 23.2.0 or later. Thanks for @fahmad6 pointed out in comment, in case someone missed that comment, I'll put it here. You need to set both textAllCaps and android:textAllCaps to false to disable all capitalize setting.
ORIGINAL ANSWER
By default, tabs are created by TabLayout sets the textAllCaps property to be true, you have to define a style making this flag false.