Shares of Indian textile companies fell sharply on July 31 after former US President Donald Trump announced a 25% tariff on Indian goods, effective from August 1. The move comes as part of a broader trade strategy targeting multiple nations and has spooked investors, particularly in export-dependent sectors like textiles.
Textile Stocks Under Pressure
Major textile exporters saw a significant sell-off in early trade:
Gokaldas Exports: down 9%
Pearl Global Industries: down 7%
Welspun Living, Indo Count Industries, Vardhman Textiles, KPR Mills: declined 3% to 6%
The tariffs are seen as a direct hit to the competitiveness of Indian apparel exports, especially in the US market.
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Trade Competitiveness Concerns
India competes with Bangladesh, Vietnam, and China in the global apparel export market. According to media reports:
Bangladesh is facing a 35% tariff, but US officials may consider reducing this
Vietnam has recently agreed to a 20% tariff through a bilateral deal
India’s 25% tariff is seen as one of the steepest, with additional penalties for energy and defence deals with Russia
This development threatens to derail months of trade negotiations between India and the US.
Market Reactions & Analyst Commentary
The broader market sentiment remains cautious. Analysts told Reuters that the new tariff and penalty structure could negatively impact exports and GDP growth in the short term.
“Investors will reassess their strategies with a mix of caution and optimism after the tariffs and penalties imposed on Indian goods,” said Utsav Verma, Head of Research at Choice Institutional Equities.
Verma also added that textiles, pharmaceuticals, and auto components may face reduced investor interest due to their export exposure.
Neutral Analysis
The proposed 25% tariff on Indian exports to the US has sparked a sharp reaction in textile stocks, as the US remains one of India’s key apparel export markets. While negotiations are expected to resume in mid-August, near-term uncertainty is likely to weigh on investor sentiment in export-focused sectors.
With global trade tensions resurging, market participants are likely to stay cautious until a clearer resolution emerges from diplomatic talks.
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