Textile stocks maintained their strong momentum for the second consecutive trading session on Wednesday, February 4, extending robust gains from the previous day. The announcement of a comprehensive trade deal between the United States and India has significantly strengthened investor sentiment across the sector, making these counters increasingly attractive to domestic investors who are betting on improved earnings visibility.
Major Gainers Lead the Rally
After an impressive 20% rally in the previous session, shares of Gokaldas Exports gained another 20% to hit the day's high of ₹832.85 per share. Indocount Industries shares also surged 20% to reach ₹343 per share, marking another day of locking in the upper circuit limit. Faze Three joined the rally with a 20% gain to reach ₹529.90 per share.
Other prominent textile stocks traded with substantial gains, including Pearl Global (up 10%), Trident (up 4.5%), Welspun Living (up 4.3%), and KPR Mill (up 2.5%). The sector-wide enthusiasm reflects growing confidence in the improved trade dynamics between India and its key export markets.
Tariff Relief Creates Competitive Advantage
The trade breakthrough came after multiple rounds of negotiations between India and the United States. US President Donald Trump on Monday announced a reduction in tariffs on Indian imports to 18% from the previous 25%. Additionally, reports indicate the removal of an additional punitive 25% duty that had been imposed in response to India's crude oil purchases from Russia.
This revised tariff structure provides India with a significant competitive edge over other major Asian economies. China, which holds the largest export share to the US market, continues to face higher tariffs of up to 37% imposed by Washington. For the textile sector specifically, this announcement removes a crucial overhang that had been weighing on investor sentiment.
Analysts Had Warned of Order Diversion
Market analysts had previously cautioned that sustained higher tariffs could prompt global buyers to diversify their orders toward competing countries such as Bangladesh and Vietnam. The tariff reduction now positions Indian textile exporters more favorably in the global marketplace, potentially reversing any trend of order diversion that may have begun.
Third Major Boost for Textile Sector
The US tariff reduction represents the third major positive development for India's textile industry in recent months. This follows the finalization of a landmark free trade agreement between India and the European Union in January, which is expected to reduce tariffs on textile and apparel products from 12% to zero.
Sammir Dattani, Executive Director of Sanathan Textiles, commented on the European opportunity: "Europe is home to some of the world's leading fashion brands and automotive manufacturers, both of which rely extensively on imported textiles for apparel, upholstery, technical fabrics, and automotive interior applications."
Furthermore, in May 2025, India and the United Kingdom signed a comprehensive free trade agreement after years of negotiations. This pact enhances the competitiveness of Indian textile manufacturers in the UK market, where competing countries like Pakistan, Bangladesh, and Sri Lanka currently enjoy duty-free access under the UK's Generalised Scheme of Preferences.
Trade Deals Support Export Dominance
India has established itself among the top textile-exporting countries globally, commanding approximately 4% of worldwide textiles and apparel exports. The United States, European Union, and United Kingdom collectively account for over 50% of India's total textile and apparel exports, according to industry reports.
Significantly, India now maintains free trade agreements and bilateral trade arrangements with all three major export destinations, creating a favorable framework for sustained export growth in the coming years.
Brokerage Perspectives on Beneficiaries
Domestic brokerage firm JM Financial noted that India exported textiles worth $5.1 billion to the US in FY26 so far, a sharp decline from $8.3 billion in FY25. This reduction was primarily attributed to the impact of higher 50% tariffs that were in effect before the recent trade deal.
Motilal Oswal Identifies Key Players
Motilal Oswal has identified select textile and apparel companies as the biggest beneficiaries of improving trade dynamics. The brokerage highlighted companies with high exposure to the US market and potential gains in competitiveness against peers in Bangladesh and Vietnam.
According to their analysis, companies including Raymond Lifestyle, Indocount Industries, Welspun Living, and Gokaldas Exports derive between 65% and 90% of their revenues from the US market. This substantial exposure positions them well to benefit from lower tariffs and anticipated stronger order flows.
Kitex Garments was also highlighted as a key beneficiary, with nearly 90% of its revenues linked to the US market. This exposure could help revive utilization levels at the company's underutilized capacities as demand improves following the tariff reductions.
The textile sector's strong performance reflects broader optimism about India's export-oriented industries benefiting from improved trade relations with key global partners. As trade barriers diminish, Indian manufacturers are poised to capture greater market share in critical export destinations.
