Textile Stocks Surge on US Tariffs Imposition

Strategic Insights -

Mumbai-based textile stocks saw a jump of up to 9% on Tuesday following US President Donald Trump's imposition of 35% tariffs on garment imports from Bangladesh, one of the biggest exporters of garments to the US, effective August 1. The move is seen as a positive development for Indian textile exporters, who may benefit from a potential trade deal between India and the US. Analysts believe that lower tariffs could improve business prospects for textile companies, while also making Indian exports more competitive.

Key Takeaways:

  • The imposition of 35% tariffs on Bangladesh's garment exports to the US may be favorable for India, as it could lead to a trade deal with lower tariff rates for Indian exports.
  • Analysts believe that key players such as Gokaldas Exports, Vardhman Textiles, and KPR Mills are best positioned to benefit from the potential sourcing shift from Bangladesh to India.
  • The stocks of Raymond Lifestyle, KPR Mills, and Trident gained significantly, with gains of 5%, 3.6%, and 3.3%, respectively.
  • The imposition of tariffs on Cambodia and Myanmar may also have a positive impact on Indian textile exports.
  • Prerna Jhunjhunwala, VP, equity research at Elara Capital, stated that valuations are factoring in structural opportunities from the US Free Trade Agreement, the India-US trade deal, and a potential deal between the EU and India.
  • Dharan Shah, Founder of Tradonomy, an investment platform, said that Gokaldas Exports, Vardhman Textiles, and KPR Mills are best positioned to benefit from the sourcing shift, especially in high-demand US apparel segments.

Statistics:

  • 35% tariffs imposed on garment imports from Bangladesh
  • 36% tariffs imposed on Cambodia and Myanmar's garment exports
  • 18.7% growth in Indian textile exports in July 2022 [1]
  • $4.78B - value of Bangladesh's woven apparel exports to the US in 2021 [2]
  • $2.63B - value of Bangladesh's knitwear exports to the US in 2021 [2]
  • $2.55B - value of Indian knit and woven garment exports in 2021 [3]
  • $2.21B - value of Indian home textiles exports in 2021 [3]

Sources:

[1] "Indian textile exports grow 18.7% in July 2022". (Source: Textile Today)

[2] "Bangladesh's textile exports hit record $54.5 billion in 2021". (Source: The Business Standard)

[3] "Indian textile exports cross $10 billion in 2021". (Source: The Economic Times)