Indian textile stocks extended losses, sliding up to 6%, as the recently concluded US-Bangladesh trade deal heightened competitive pressures for expatriates in India’s textile and apparel sector. Investors reacted to the deal’s tariff provisions, which could bolster Bangladesh’s access to the U.S. market and narrow India’s cost-advantage shares among major players, including Gokaldas Exports, Pearl Global, Kitex Garments, Arvind Fashions, and KPR Mill. They declined as the market factored in a potential shift in export dynamics. The sell-off continued for a second consecutive session, reflecting investor caution about near-term earnings prospects.
Why stocks are falling
- Zero-Tariff Exemptions for Bangladesh: Under the Bangladesh-U.S. agreement, certain textile and apparel exports to the U.S. may receive zero-tariff access, enhancing Bangladesh’s Competitive edge.
- Tariff Competitiveness Changes: While India currently has an 18% reciprocal tariff on its textile exports to the U.S., Bangladesh will see reduced rates and exemptions, potentially driving buyers toward lower-cost suppliers.
- Market Sentiment Shift: Traders have priced in competitive concerns, prompting profit booking and selling pressure on stock that had been boosted by India’s broader trade negotiations with the U.S.
Also Read: Trump Cuts Tariffs to 18%, Bringing Relief to India.
What Experts Are Saying
Some analysts caution that the impact may be overstated, noting that Bangladesh’s infrastructure, spinning capacity, and higher freight costs could limit the immediate advantage, even with tariff reforms. Indian apparel exporters also suggest that long-term demand fundamentals remain intact, and competitive differentiation will depend on quality, lead times and product mix. Furthermore, Bangladesh’s garment sector faces distinct domestic challenges, including slowing exports and election-related economic uncertainties, which could temper the competitive threat over time.
