- Textile stocks in India, including Gokaldas Exports, KPR Mills, and Arvind Ltd, have fallen over 4%
- Bangladesh secured a reduced 19% tariff under a US trade deal impacting Indian textile exports
- India’s 18% tariff advantage over Bangladesh has narrowed significantly in the US market
Textile sector in India is facing pressure with share prices of various companies such as Gokaldas Exports Ltd., KPR Mill, Arvind Ltd falling over 4-5%.
Shares of the Gokaldas Exports Ltd. on Tuesday are trading at Rs 824.60, with the stock falling at 5.17% intraday, while KPR Mill's stock dropped 4.37% intraday, with the stock trading at Rs 951.75. Shares of Arvind Ltd. were doing no better as the stock traded at Rs 374.25, amounting to a fallof 4.02% intraday.
The fall in textile stocks comes a day after Bangladesh secured a reduced 19% tariff under a trade agreement with the United States that would exempt some textiles and garments manufactured with US materials.
Earlier this month, the Indian textile sector cheered the US-India trade deal, which saw tariffs on the space being reduced from 25% to 18%, leading to a massive surge in stocks such as Indo Count and Kitex - companies with high exposure to US markets.
What Changes For India?
With Bangladesh now facing a 19% tariff, the trade gap has narrowed sharply. India stands at 18%, leaving a difference that is effectively negligible. As a result, India no longer enjoys a meaningful pricing advantage.
Adding to the pressure is a clause in the US–Bangladesh framework that serves as both a sentiment dampener and a reality check for Indian textile stocks. Bangladesh can export garments to the US at a zero tariff if US cotton or fibres are used. This opens the door for global brands to shift more production to Bangladesh using US inputs, paying no duty, while Indian exporters continue to face an 18% tariff.
Even Indian spinners could feel the impact. Bangladesh is a major buyer of Indian cotton and yarn, and if exporters there shift to using US cotton to qualify for the zero-tariff benefit, purchases from India could decline. That, in turn, could weigh on Indian spinning companies such as Vardhman Textiles and Nitin Spinners.
That said, Indian textile exporters are still in a better position than earlier—an 18% tariff is an improvement over the 25%-plus levels seen before. However, the earlier assumption that India would seamlessly gain market share from Bangladesh no longer holds. As the gap narrows, competition is set to intensify.
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