Hopes for a breakthrough in the long-awaited US-India trade deal have spurred a rally in textile stocks, with KPR Mill, Trident, and others experiencing significant gains. Shares of these companies jumped up to 13% on Thursday, October 23, 2025, as investors bet on positive developments stemming from recent discussions between President Trump and Prime Minister Modi.

The optimism follows President Trump's Diwali call with PM Modi, where assurances were reportedly given regarding trade and Indian oil purchases from Russia. This has fueled speculation that a bilateral trade agreement is on the horizon, potentially reducing tariffs on Indian exports and fostering greater cooperation in the energy and agriculture sectors.

Several textile stocks have responded positively to these developments. KPR Mill, Trident, Raymond Lifestyle, and Gokaldas Exports all saw their share prices increase. Other textile companies experiencing gains include Vardhman Textiles, Indo Count Industries, Pearl Global, and Welspun Living. Kitex Garments (+11.90%), Arvind (+8.24%), and Welspun Living (+6.20%) also saw substantial increases.

The potential trade deal could see the U.S. lower tariffs on Indian imports from 50% to a range of 15-16%. In return, India might scale back its Russian crude oil imports and open its markets to non-genetically modified U.S. corn and soymeal. The agreement could be revealed at the upcoming Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur, scheduled for October 26-28, where President Trump and Prime Minister Modi may meet.

The textile industry is a significant contributor to India's economy, accounting for 2.3% of the GDP and employing over 45 million people. The United States is a major export market for Indian textiles, representing $10.8 billion, or 30%, of all textile and apparel exports from India.

However, the industry has been facing challenges due to tariffs imposed by the U.S., which have undermined the competitiveness of Indian textile and apparel exports. These tariffs have led to reduced sales revenue, order cancellations, and increased inventory build-up for many exporters. Many businesses have had to offer discounts to retain buyers, impacting their profit margins.

The Confederation of Indian Textile Industry (CITI) has reported that 34% of textile businesses have seen their sales revenue reduced by half due to the tariffs. A survey by CITI revealed that 67% of exporters have offered discounts of up to 25% to remain competitive.

If the US-India trade deal materializes with lower tariff rates at 15%, it could give the Indian textile sector a competitive advantage against countries like Vietnam and Bangladesh, which face tariffs of 20% and 35% respectively.

While the optimism surrounding the trade deal has boosted textile stocks, the industry has also been helped by other factors such as the India-UK Free Trade Agreement (FTA), reduced GST on garments, and efforts to diversify exports. The India-UK FTA, for example, has eliminated 10-12% tariffs on Indian exports to the UK.