US Tariffs Squeeze Indian Textile Exporters: Sector Stocks Surge as India–US Trade Deal Nears Completion

Mumbai | November 12 – India’s textile exporters are feeling the heat from steep US import tariffs, even as market optimism grows that a bilateral trade deal between India and the United States could soon offer long-awaited relief. The tariff shock has led to order cancellations, payment delays, and rising NPA risks for smaller manufacturers, while select listed textile and apparel firms rallied sharply on renewed trade optimism.

The US administration’s decision to double tariffs on Indian goods to 50 per cent from August 27 has hit key labour-intensive sectors including textiles, leather, and gems & jewellery, triggering a liquidity crunch for small and medium enterprises (MSMEs). Many exporters are grappling with unsold inventory and cash flow delays, leading to concerns about potential loan defaults.

Textile Exporters Bear the Brunt of Tariff Pressure

India’s apparel shipments have dropped sharply since the tariff announcement. Data shows apparel exports fell 14.8% between July and September 2025, while overall exports to the US plunged 21% month-on-month in September to $5.4 billion. Within this, cotton garments and accessories slumped 25% year-on-year, underlining the depth of the slowdown.

About 70% of India’s textile manufacturing units fall under the MSME category. For many, payment cycles have stretched beyond 90 days, crossing the RBI’s non-performing asset (NPA) threshold and putting additional strain on working capital lines.

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Industry associations have urged policymakers to consider temporary moratoriums and extend credit support to prevent a wider default cycle within the MSME network.

India–US Trade Talks Offer Glimmer of Relief

Despite near-term challenges, diplomatic momentum has picked up. President Donald Trump said this week that Washington and New Delhi are “pretty close to a fair trade deal,” adding that tariffs on Indian goods would be reduced “at some point.”

Commerce and Industry Minister Piyush Goyal reaffirmed that India seeks a “fair, equitable and balanced” agreement that supports exporters while protecting key domestic sectors such as agriculture and dairy.

If concluded, the deal is expected to restore competitiveness for India’s $11 billion textile export market to the US, which has been constrained by the tariff regime since August.

Export-Oriented Stocks Rally on Deal Optimism

Positive cues from Washington triggered a sharp rally in textile and apparel stocks on Wednesday. Shares of Pearl Global Industries surged 14% to ₹1,609.20, nearing their 52-week high, while Indo Count Industries jumped 12% to ₹306.50 on the BSE amid heavy volumes.

Pearl Global, which has diversified its footprint beyond the US – reducing its dependency on the American market from 86% in FY21 to 50% now cited a strong recovery across Australia, Japan, the UK, and the EU.

Meanwhile, Gokaldas Exports gained nearly 5%, Raymond Lifestyle rose around 2%, and KPR Mill added 1%, mirroring broader optimism in the sector.

The rally extended to shrimp exporters such as Apex Frozen Foods and Avanti Feeds, which advanced 11% and 7% respectively. These companies derive over 50% of their export revenue from the US, making them key beneficiaries of any tariff rollback.

By 1:00 PM, the BSE Sensex was trading 0.84% higher at 84,573, buoyed by gains in export-oriented counters.

Liquidity Stress Persists Until Policy Action

While sentiment in listed equities remains upbeat, MSME exporters continue to face severe liquidity constraints. Many smaller units are struggling to secure payments, and credit rollover has become critical to sustain operations through Q3 FY26.

Policymakers are monitoring the situation closely as a prolonged slowdown could affect employment in key manufacturing hubs such as Tiruppur, Ludhiana, and Surat.

If the India-US trade agreement is finalised in the coming weeks, exporters could regain lost momentum and stabilise cash flows. Until then, industry watchers say relief hinges entirely on tariff clarity and improved buyer confidence from the US.

With inputs from Moneycontrol.com

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