The shares of textile companies surged on Tuesday following the India-US trade deal that cuts tariffs on Indian exports
As India and the United States agreed to a trade deal that lowers tariffs on Indian exports, Labour-intensive sectors such as textiles, gems and jewellery are set to to be the biggest beneficiaries. The trade deal cuts reciprocal tariffs on Indian goods to 18 per cent, as per the statement by the US President Donald Trump.
“The US tariff on Indian products was as high as 50 per cent on most Indian exports, which has now been lowered to 18 per cent, making India more competitive in the US market, especially in the manufacturing category. The trade agreement provides several opportunities for diversified markets and accelerates scale-up plans for many textile and apparel categories. We think the true impact will be a function of how quickly the changes can be implemented and how well manufacturers can navigate cost and scale,” stated Suketu Shah, Chief Executive Officer, Vishal Fabrics.
The shares of textile companies surged on Tuesday following a new India-US trade deal that cuts tariffs on Indian exports, boosting earnings outlook for a sector reliant on the US market. Gokaldas Exports, Garware Technical Fibres and Indo Count Industries hit their upper circuits of 20 per cent. Welspun Living jumped 18.93 per cent, Vardhman Textiles rose 12 per cent per cent, Arvind gained 10.93 per cent, Raymond Lifestyle climbed 6.80 per cent.
“The US – India trade agreement represents a meaningful reset for India’s textile sector, bringing long-awaited clarity after an extended period of tariff-related uncertainty. Elevated duties had weighed on demand from the US India’s largest export market but the reduction of reciprocal tariffs to around 18 per cent materially improves cost competitiveness,” stated Sammir Dattani, Executive Director, Sanathan Textiles.
Gradual Recovery In Demand
“With duties normalising, India can regain lost share in value fashion and replenishment programmes, especially where reliability and shorter lead times matter. The opportunity now is to convert tariff relief into sustained business by improving scale, and product mix rather than treating it as a short-term windfall,” highlighted Abhishek Dua, Co-founder, Showroom B2B.
Experts noted that with the US accounting for nearly 28 per cent of India’s textile and apparel exports, this easing of trade barriers provides a clear pathway for a gradual recovery in demand. As US buyers reassess and rebalance their sourcing strategies, Indian manufacturers are positioned to gain a relative advantage over competing supplier countries, reinforcing India’s role in global supply chains.
“The tariff reduction significantly enhances the cost competitiveness of Indian exporters in the US market. At 18 per cent, India now enjoys a lower tariff rate than key competitors such as Bangladesh, Vietnam, Sri Lanka, Taiwan, Pakistan, Indonesia, Malaysia, and Thailand. Even major exporters like Canada and South Africa face higher duties, placing India in a relatively advantageous position,” stated Nirmal K Minda, President, Associated Chambers of Commerce and Industry Of India (Assocham)
This shift is expected to translate into a steady revival in order flows, improved pricing discipline, and progressive margin stabilisation across the sector, Dattani added. Indian textile exports now face tariffs lower than those imposed on rival garment hubs like Vietnam and Bangladesh, which encounter around 20 per cent duties, thereby enhancing India’s competitive position in the US market.
“The volume of ethnic wear which includes kurtis and block-printed fabrics from Jaipur will increase by 25 per cent when rules of origin become simpler and enable better connections with American fast-fashion brands. The main challenges which need to be resolved include the protection of traditional motifs through intellectual property laws and the need to meet US environmental regulations,” stated Anuj Mundhra, Founder, Chairman and Managing Director, Nandani Creation (Brand Jaipur Kurti).
“The system creates supply chain stability through the combination of Indian expert craftsmanship and American technological advancements which benefit both nations economically in the post-pandemic era,” stated Lokendra Ranawat, Co-founder & CEO, WoodenStreet.
A Series Of Trade Deals
Apart from the latest development in the India-US trade deal front, the textiles sector has got another booster dose through the India-European Union (EU) free trade agreement. India’s textile and apparel sector is poised for a major leap following the conclusion of the India-European Union Free Trade Agreement (FTA). For an industry that employs around 45 million people directly, zero-duty access to the EU’s USD 263.5 billion textile import market is expected to boost competitiveness, scale production and generate employment across labour-intensive clusters.
“2:2:50, two deals in two weeks with nations of more than USD 50 trillion economic size. The common factor here being ‘India’. As we reflected on the current economic order , India has seized every opportunity to make its place in the Global trade. We are now very well positioned to make this a big success for us,” highlighted Anil Talreja, Partner, Deloitte India.
Industry leaders say the agreement not only eliminates a long-standing tariff disadvantage of up to 12 per cent, but also positions India as a reliable, value-driven sourcing partner for Europe. Categories like cotton-based and blended apparel, home decor segments and automotive interior fabrics are expected to see the strongest gains, with potential to capture market share from traditional competitors like Bangladesh, Vietnam and Turkey.
