India-US trade deal: KPR Mill, other textile stocks in focus as interim agreement confirms reduced 18% tariff

Synopsis

Textile stocks are poised for a boost as India and the US finalize an interim trade deal, reducing tariffs on textile exports to 18%. This agreement alleviates a significant overhang for the sector, which heavily relies on the US market for revenue. The deal is expected to attract foreign investors and potentially trigger a market turnaround.

Shares of export-heavy textile companies such as Gokaldas Exports, KPR Mill, Welspun Living and Indo Count, among others, are set to be in focus when markets open on Monday, February 9, after the interim agreement of India and the US trade deal confirmed a reduced 18% tariff on textile exports.

“Under the agreement, United States will apply a reciprocal tariff rate of 18 percent under Executive Order 14257 of April 2, 2025 (Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits), as amended, on originating goods of India, including textile and apparel,” White House stated in its joint statement with India.

Textile stocks had borne the brunt of selling ever since the announcement of reciprocal tariffs and trade deals between the US and other countries, given the sector’s heavy dependence on the US market. Most listed textile exporters derive 50%–70% of their total revenue from the US. Gokaldas Exports, Welspun Living and Indo Count generate close to 70% of their revenue from the US, while Pearl Global and KPR Mills derive around 50%.

For Indian markets, the deal removes a key overhang that had kept foreign investors cautious and pushed equities into a phase of prolonged underperformance. Indian markets struggled through January, with the Nifty shedding over 1,000 points at its worst, while foreign portfolio investors sold billions of dollars worth of equities.

Persistent trade uncertainty, a weakening rupee and global risk-off sentiment had made Indian equities among the weaker performers across major markets. Analysts had consistently maintained that any breakthrough on the India-US trade front could act as a trigger for a market turnaround.

Alongside the free trade agreement with the European Union concluded last month, India now has robust trade agreements with two of the world’s largest trading blocs—a first in the country’s economic history.

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