The fall in share prices comes a day after Bangladesh secured a reduced 19% tariff under a trade agreement with the United States. The Indian textile sector is under pressure, with stocks of companies like Gokaldas Exports Ltd., KPR Mill, and Arvind Ltd. dropping 4–5%.
Shares of Gokaldas Exports Ltd. traded at Rs 824.60 on Tuesday, down 5.17% intraday. KPR Mill fell 4.37%, trading at Rs 951.75, while Arvind Ltd. dropped 4.02%, closing at Rs 374.25.
The decline in textile stocks follows Bangladesh’s new 19% tariff under the US trade agreement, which exempts certain textiles and garments made with US materials.
Earlier this month, the Indian textile sector welcomed the US-India trade deal, which reduced tariffs from 25% to 18%. This led to a surge in stocks such as Indo Count and Kitex, which have high exposure to US markets.
What Changes for India?
With Bangladesh now facing a 19% tariff, the trade gap with India has narrowed. India’s tariff stands at 18%, leaving almost no pricing advantage. As a result, Indian exporters no longer enjoy a significant edge.
Adding to the pressure is a clause in the US–Bangladesh framework that allows Bangladesh to export garments to the US at zero tariff if they use US cotton or fibres. This could encourage global brands to shift production to Bangladesh using US inputs, while Indian exporters still face an 18% tariff.
Even Indian spinners may feel the impact. Bangladesh is a major buyer of Indian cotton and yarn. If Bangladeshi exporters switch to US cotton to qualify for zero tariffs, purchases from India could drop, affecting spinning companies like Vardhman Textiles and Nitin Spinners.
That said, Indian textile exporters remain in a better position than before. An 18% tariff is an improvement over the previous 25%+ rates. However, the expectation that India would easily gain market share from Bangladesh no longer holds. With the gap narrowing, competition in the sector is likely to intensify.
Also Read : US–India Interim Trade Agreement Near Finalisation, Says White House
