Textile Stocks Soar: Trade Deal Boosts Market
The recent trade deal between India and the United States has sent ripples through the textile market, causing stocks to soar by as much as 20%. This significant agreement, announced on February 3, aims to reduce tariffs on Indian goods from 25% to 18%, providing immediate relief to the textile sector, which has been struggling with challenges over the past two years.
Textile companies like Kitex Garment and Indo Count saw their shares jump substantially, reflecting the optimism surrounding the trade agreement. Other notable stocks, including Welspun Living, KPR Mill, and Arvind, also recorded impressive gains. The textile sector is one of the biggest beneficiaries of this deal, which is expected to revitalize exports to the US, India’s largest textile market.
The trade deal comes as a much-needed boost for the Indian textile industry, which has faced significant headwinds due to high tariffs. According to reports, the US accounted for 28% of India’s textile and apparel exports, valued at approximately $11 billion out of a total of $38 billion in the financial year ending March 2025. The reduction in tariffs is anticipated to encourage more exports, which had previously seen a decline of over 50% for many textile exporters in late 2023 due to the steep tariffs.
This agreement is not merely a short-term sentiment trigger; it provides structural relief to an industry that has been grappling with inventory issues and margin pressures. The textile sector, alongside gems and jewellery and engineering goods, is now positioned to thrive as the trade barriers diminish.
As the news continues to unfold, investors are keenly watching the textile stocks, considering them a promising prospect in light of the newly established trade relationship with the US. With the immediate implementation of the tariff cuts, the future looks brighter for Indian textile producers, making it an opportune time for investment in this sector.
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