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India-US Deal: Lower Tariffs Boost Textile Exports
3 Feb
Summary
- New US trade deal sets Indian textile tariffs at 18%.
- This rate is lower than competitors Vietnam and Bangladesh.
- Textile stocks were impacted by previous higher tariffs.
Indian textile stocks, including Gokaldas Exports, Welspun Living, KPR Mill, and Indo Count Industries, are expected to be in sharp focus on Tuesday, February 3. This attention follows the announcement of a new trade agreement between India and the United States, revealed late Monday night by President Trump and Prime Minister Modi via social media. The core of the deal involves a reduction in US tariffs on Indian textile exports to 18%.
This new tariff rate positions India favorably compared to other major garment exporting nations like Vietnam and Bangladesh, both of which are subject to a 20% tariff. Previously, the threat of higher tariffs had significantly impacted these Indian textile companies, many of which derive a substantial portion, between 50% to 70%, of their revenue from the US market. Analysts note that India's previous 6% market share in US readymade garment imports could see an increase with this more favorable tariff structure.
Despite the positive outlook, the recent past saw considerable pressure on these stocks. Shares of Gokaldas Exports had fallen 17% in the preceding month, Welspun Living by 6%, and Indo Count Industries by 14%. Gokaldas Exports' Vice Chairman & Managing Director had previously indicated a strong orderbook pipeline extending into the first quarter of financial year 2027, although acknowledging that tariffs had reduced US export margins to single digits, with the burden being shared with clients.
