Textile Stocks Rally as India–US Trade Deal Cuts Tariffs to 18%
- 3rd February 2026
- 02:00 PM
- 4 min read
Summary
India’s textile sector is seen as the biggest winner of the India–US trade deal, with tariffs cut to 18% restoring competitiveness in the US, which accounts for nearly 28% of India’s textile exports. Stocks such as Gokaldas Exports, KPR Mill, Vardhman Textiles, Indo Count and Trident jumped upto 20% in early trade as sentiment turned positive.Mumbai | February 3, 2026
India’s textile and apparel sector, which had been under sustained pressure over the past year, is back in focus after the India–US trade deal reduced reciprocal tariffs on Indian goods from as high as 50% to 18%. The move is widely seen as a reset for exporters who had struggled with margin pressure and loss of competitiveness in the US market.
How Important Is the US for India’s Textile Exports?
The United States is India’s largest export destination for textiles and apparel, accounting for nearly 28% of India’s total textile exports. For several listed textile companies, the dependence is even higher, with the US contributing 50–70% of overall revenues, particularly in garments, home textiles and carpets.
This high exposure explains why US tariff changes have a direct and outsized impact on Indian textile companies.
Higher US Tariffs Had Hit India’s Textile Exports
The stress began between August and September 2025, when the US imposed a cumulative tariff burden of nearly 50%, including punitive levies, on Indian exports.
Export-heavy segments such as home textiles and carpets were the most vulnerable. Industry estimates show exports account for 70–75% of sales in home textiles and 65–70% in carpets, with the US contributing around 60% and 50% of exports respectively.
Given the discretionary nature of these products, companies had limited ability to pass on higher costs, leading to margin compression and weaker profitability.
Trade Data Points to a Sharp Export Slowdown
The impact of higher tariffs was reflected sharply in trade data. In October 2025, India’s textile and apparel imports into the US declined steeply:
- Total apparel imports: –28.5%
- Cotton apparel: –30.6%
- Cotton sheets: –46.6%
- Towels: –17.1%
India also lost market share across most categories to competitors such as Vietnam and Pakistan, while towels were the only segment to gain share, largely at China’s expense.
What Changes With the India–US Trade Deal?
Under the trade agreement announced by US President Donald Trump and Prime Minister Narendra Modi, reciprocal tariffs on Indian goods will be reduced to 18%.
This brings India broadly at par or slightly better than competing textile exporters such as Vietnam and Bangladesh, which operate at effective tariff levels of around 20%.
The tariff reduction is also expected to support India’s external balances by improving export competitiveness and easing pricing pressure for exporters.
Why Textiles Are the Biggest Beneficiaries
Textiles are among the biggest beneficiaries because they were also among the worst hit by the earlier tariff hikes.
Indian exporters already have established customer relationships and supply chains in the US. The higher tariffs had become the primary hurdle to growth. With that barrier now easing, companies can re-engage buyers and redraw supply plans for the next 10–12 months.
Lower tariffs also help offset India’s cost disadvantage versus peers like Bangladesh and Vietnam, which benefit from significantly lower wage costs.
Companies With High US exposure (60–70%)
- Gokaldas Exports
- KPR Mill
- Indo Count Industries
- Welspun India
- Himatsingka Seide
- Kitex Garments
Textile Stocks Rally
Textile stocks with high exposure to the US market rallied sharply after the trade deal announcement, with several names rising 15–20% in early trade.
Shares of Gokaldas Exports, KPR Mill, Indo Count Industries, Welspun India, Himatsingka Seide and Kitex Garments saw strong buying interest, while Gokaldas Exports, KPR Mill and Trident were locked in their upper circuits.
Stocks with relatively lower US exposure, including Vardhman Textiles, SP Apparels and Arvind, also gained, though the reaction was more muted.
Will Earnings Recover Immediately?
Experts caution that while the tariff hurdle has been removed, earnings recovery will depend on US consumer demand. A clearer picture is expected to emerge over the next two to three quarters, especially during seasonally stronger periods for exporters.
Policy Support Adds a Longer-Term Cushion
The textile sector continues to receive policy backing due to its labour-intensive nature, role in employment generation and contribution to foreign exchange earnings. Recent Budget measures, including Mega Textile Parks and export-friendly initiatives, add to the sector’s longer-term stability.
For more sectoral and market updates, follow PL Capital.
