India-E.U. KPR Mills, Welspun Living, other textile, pharma, chemicals stocks rise on trade deals
India-E.U. Trade agreement may increase India's exports to EU by $50 billion
Tariff cuts expected to benefit textile, pharma and chemicals sectors
Faster drug approvals and lower costs could help Indian pharma exports to EU
India-E.U. The trade deal is likely to be announced later today, with analysts hoping the "mother of all deals" could bring some much-needed optimism to the domestic equity market. The discussion has led to strong gains in shares of KPR Mills, Welspun Living and Nitin Spinners, which are expected to benefit from the FTA.
At present, India's exports to the EU constitute 17 percent of its total exports. According to MK Global, the bilateral agreement could increase India's exports to the EU. Medium-tech manufacturing results in about $50 billion.
"Improved import efficiency and higher FDI will support productivity gains and technology transfer, while greater regulatory certainty could aid IT services exports, where the E.U. already accounts for a third of demand," the brokerage said.
As a result, key sectors that investors can look at to cash in on the optimism are the pharma, textiles and chemical sectors, coupled with a broader structural recalibration of India's exports. However, MK said that while the India-E.U. The deal may be well received by the market, a useful U.S.-India deal, rupee stability and less global noise will remain important.
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Whereas Indian exports textile and apparel to the European Union. Indian textile imports constitute about 38 per cent of the total. Which is only five percent of the total.
Top suppliers to EU for textiles and apparel in CY24 are China (~28 percent), Bangladesh (22 percent), Turkey (~11 percent), Vietnam (~6 percent), India (~5 percent). Also, while India sees between 10-12 per cent tariff, Bangladesh, Vietnam, Ethiopia see 0 per cent tariff through FTAs.
"If the tariff is reduced from 10-12 per cent to 0 per cent, there will be a huge increase in India's price competitiveness as it will be at par with Vietnam and Bangladesh. India is well positioned to capture higher market share in knitwear, outerwear and trousers," MK said.
Stocks to watch:
If India reduces its import duty on vegetable textile fibre, paper yarn and woven fabrics, it will benefit Indian textile manufacturers, who will have lower input costs. On this front, the major beneficiaries will be Arvind, Vardhman Textiles and KPR Mills.
Furthermore, if the E.U. By reducing duty on textiles to zero, India will be well placed to capture higher market share in knitwear, outerwear and trousers from Bangladesh and Vietnam, which will benefit KPR Mills.
read more :- The rupee closed 03 paisa higher against the dollar at 91.72
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