Textile Stocks Rally Up to 7% After India-US Trade Framework Slashes Tariffs to 18%

Shares of Indian textile companies jumped sharply in early trade on Monday following the announcement of an interim trade framework between India and the United States that reduces reciprocal tariffs on Indian textile exports to 18%, down from previously punitive duty levels that reached as high as 50% on certain categories. The move was widely welcomed by markets and industry participants as a boost to export competitiveness. 

Stock Market Response

Export-oriented textile stocks saw notable gains as investors reacted to the improved tariff outlook:

• Gokaldas Exports and other key names in the segment rose as much as 7% in early trade. 
• Several mid-cap and small-cap textiles and apparel stocks also moved higher, tracking broader market optimism.
• The overall Indian market was buoyed, with benchmarks like the Sensex and Nifty climbing on the back of the trade deal and positive earnings in other sectors. 

Broader export stocks and related sectors, such as leather and footwear, also saw improved sentiment, reflecting expectations of tariff relief across labour-intensive categories. 

What Changed?

Under the interim trade framework unveiled last week, the United States agreed to cut reciprocal tariffs on Indian goods, including apparel, textiles, and made-ups, to 18% from around 50%. This adjustment is designed to make Indian products more price-competitive in the US market, the largest destination for Indian textile exports, which has historically accounted for a significant share of outbound shipments. 

According to the Indian government’s textile ministry, the deal opens up access to a $118 billion segment of the US textile and apparel market, in which Indian exports have historically been limited by high duties. In 2024-25, roughly 70% of India’s apparel exports and about 15% of textile made-ups were routed to the US, underscoring the importance of tariff parity for sustained growth.

Industry Implications

Lower US tariffs are expected to have several commercial effects on Indian exporters:

• Improved price competitiveness: Reduced duties position Indian textiles more favourably relative to major competitors such as Bangladesh (20% tariff), China (30%), Pakistan (19%), and Vietnam (20%). 
• Order flow revival: Exporters in hubs such as Tiruppur expect a recovery in order volumes as the cost disadvantage is moderated, potentially clearing backlogs worth around ₹4,000 crore of pending shipments. 
• Margin support: With lower tariffs, landed costs in the US market are expected to decline, helping firms improve pricing power and operating margins after a period of tariff-induced pressure. 

While the interim framework stops short of a full free-trade agreement, the tariff cut represents a significant reset in India-US trade dynamics for textiles and other labour-intensive export segments. The shift from punitive duties to a uniform 18% rate realigns unit economics for exporters, enabling them to better compete for market share in the US.

Industry bodies such as the Confederation of Indian Textile Industry have welcomed the tariff reduction, noting that it aligns with long-standing demands for predictable duty structures and clearer market access. Reduced tariffs are also expected to support job retention in factory hubs and spur investment in capacity expansion over the medium term.

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