MUMBAI: For the Indian textile industry, the Oval Office has spun a surprising tale, in which Vietnam, Bangladesh, China or Sri Lanka have been harmed by imposing far more punitive tariffs than hubs in Tirupur, Surat or Noida.
So, shares of textile manufacturers jumped as much as 18% on Thursday, as the 26% tariff imposed on home furnishings and readymade garments from India is lower than the 54% tariff imposed on China, 46% on Vietnam, 37% on Bangladesh and 30% on Pakistan.
In fact, Indian manufacturers will benefit from the 'Liberation Day' announcements by the White House.
Gautam Shahi, director, Crisil Ratings, said, "Tariffs on Indian textiles are lower than other major exporting countries, which could enhance India's competitiveness and help it increase its share in US textile exports.
" However, analysts cautioned that while the tariff differential would benefit India, higher duties could also lead to higher end product prices, dampening demand in the medium term. "How these tariffs impact consumers and the potential reversal of tariffs on India or competitors will be key factors to watch out for," Shahi said.
The US is India's largest textile export market, accounting for 28% of India's total textile exports, valued at $35 billion in FY24. Despite this, Indian textiles currently hold only a 9% share in the US market, trailing behind Vietnam (15%) and China (24%).
"We expect this tariff structure to make Indian textiles more attractive to US buyers, potentially increasing India's market share in the US," said Antu Thomas, senior research analyst at Geojit Investments. "However, in the near term...
Despite short-term concerns, analysts maintain a positive long-term outlook on the sector, especially for companies with strong capital expenditure plans and high export focus such as Welspun Living, Indo Count Industries, Trident, Gokaldas Exports.
"These companies are well positioned to take advantage of the changing trade landscape and rising global demand," Thomas said.
