Textile stocks experienced a dramatic surge, jumping up to 44% in two days as the sector capitalized on the US tariff reduction announcement. According to latest market reports, Gokaldas Exports hit the upper circuit for the second day in a row, rising nearly 20% to around ₹835, while Indo Count Industries gained 20% and Pearl Global Industries advanced 8%. The rally continued for the second straight session on Wednesday, with textile stocks significantly outperforming the broader market. As per market reports, the surge was triggered after the US reduced tariffs on Indian exports from 50% to 18%, improving India-US trade relations and export prospects for the sector.
President Donald Trump announced a significant reduction in US tariffs on Indian goods from 50% to 18%, a move that Prime Minister Narendra Modi acknowledged. According to latest reports, if fully implemented, this adjustment would markedly enhance the competitiveness of Indian merchandise in the US market. India and the United States have agreed to a trade arrangement under which reciprocal tariffs on Indian goods will be reduced to 18% from 25%, with the development having significantly improved sentiment for textile companies. The extra 25% duty on imports of Russian crude oil will be removed, as per Trump's announcement. Motilal Oswal expects the company's non-auto exports to benefit, as these do not fall under the Section 232 tariffs of 25%, improving competitiveness in the US market. Indian products would face rates comparable to, or even better than, regional competitors such as Bangladesh, Vietnam, Sri Lanka, and Pakistan, which currently incur US tariff rates between 19% and 20%. The announced rate also significantly undercuts China's prevailing tariff level of 34% to 37%, potentially boosting India's export competitiveness against regional rivals and China.
India currently holds about 8% share of US textile imports worth around $102 billion, with market share improving since the Covid period while China's share has declined sharply. With US tariffs now at 18%, India has a cost advantage over other Asian exporters such as China, Bangladesh, Vietnam, Sri Lanka, and Pakistan, where tariffs range between 19% and 30%. This opens up access to a much larger export opportunity of about $344 billion across the US, UK, and EU markets. According to Motilal Oswal, Indo Count's high US revenue share of 65%–90% places it in a strong position to gain, while Welspun Living with 41% of revenue derived from the US could see a 100–200 bps improvement in margins. The rally reflects optimism around lower tariffs, stronger export demand, and India's growing competitiveness in global textile markets, with earnings growth for textile exporters expected to remain strong in the coming years.
Despite the tariff announcement, critical details regarding implementation timing, agricultural market access, Russian oil imports, and purchase commitments remain undefined, creating substantial uncertainty for businesses. Official Indian sources have stressed that the specifics of any agreement require further negotiation and formalization by joint teams, leaving the precise timing and mechanics of the tariff reduction undefined. This lack of immediate clarity means the proposed benefits remain theoretical for businesses that rely on predictable supply chains and contract pricing. The Nifty 50 has demonstrated sensitivity to trade policy shifts, often experiencing muted trading or pullbacks amid prolonged uncertainty, as businesses requiring predictability for contract negotiation, pricing, and supply chain management are left in a state of suspended animation.
Several major textile companies maintain substantial exposure to the US market, creating significant opportunities from the trade deal. As reported by NDTV Profit, companies such as Indo Count Industries, Kitex, Gokaldas Exports, Pearl Global and Welspun India have 60% revenue exposure to the US market, meaning more than half of their income comes from across the Atlantic. More diversified companies like Trident, Arvind, and SP Apparels still maintain sizable US exposure ranging from 9% to 28%. The deal is expected to strengthen India's position as a reliable sourcing partner amid the China + 1 echoes, with industrialists anticipating capacity addition and bold capital deployment in the coming days. According to recent analysis, India's textile, clothing, pharmaceutical, diamond and jewellery as well as the processed food industry stand to gain from the easier market entry to the US and the reduction of tariffs. The Union Budget announcement on setting up Mega Textile Parks has further strengthened the sector narrative, with Finance Minister Nirmala Sitharaman announcing Mega Textile Parks would be developed in challenge mode with focus on integrated infrastructure and value addition.
