India-US trade deal impact: Textile stocks rallied up to 20% in intraday deals on Tuesday, February 3, as the sector is being seen as one of the biggest beneficiaries of the India-US trade deal announced late last evening.
India and the United States have agreed to a trade agreement under which reciprocal tariffs on Indian goods will be slashed to 18% from 25%, and the additional 25% duty on purchases of Russian crude oil will be eliminated.
The trade deal will be “effective immediately”, US President Donald Trump said, following a phone call with Prime Minister Narendra Modi late Monday, offering immediate tariff relief for India.
Following this announcement, textile stocks like Kitex Garment and Indo Count zoomed 20% each. Welspun Living, KPR Mill, Arvind, Trident, Bombay Dyeing and Vardhaman Textiles shares gained up to 18%.
Labour-intensive sectors such as textiles, gems and jewellery, and engineering goods are being seen as the clear winners, as all faced growth headwinds due to higher tariffs.
The US remains India’s top market, taking 28% of its textile and apparel exports, worth about $11 billion out of $38 billion in the financial year ending March, 2025, a Reuters report showed.
In the presence of the steep tariffs on Indian textiles, the US shipments fell more than 50% in October-December from July-September for nearly one-quarter of textile exporters, a CITI survey, quoted by Reuters, showed.
India recently struck a free trade agreement with the European Union, which is the second-largest textile market for Indian exports.
A tariff cut could provide a fresh impetus to the textile market. At 18%, India’s tariff rate is also lower than that of several major export-oriented Asian economies. Bangladesh, Sri Lanka, Taiwan and Vietnam face tariffs of 20%, while Indonesia, Malaysia, Thailand, the Philippines and Pakistan face tariffs of 19%.
For a sector that has spent the last two years grappling with inventory destocking, weak demand, and margin pressure, this development acts as a structural relief rather than a short-term sentiment trigger.
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