The India-US trade deal, announced recently, has sent Indian textile stocks soaring, with KPR Mill and Gokaldas Exports leading the rally. The agreement, which slashes tariffs on Indian goods entering the United States from 50% to 18%, is expected to significantly boost the competitiveness of Indian textile exporters.
Market Surge
The Bombay Stock Exchange (BSE) witnessed a historic rally on Tuesday, February 3, 2026, with the Nifty 50 index opening at 26,308.05, a jump of 1,219.65 points, or 4.86%. The BSE Sensex also surged by 3,656.74 points, or 4.48%, opening at 85,323.20. This surge reflects strong investor optimism across various sectors, particularly in textiles.
Textile Stocks in the Spotlight
Gokaldas Exports and KPR Mill, along with other textile companies such as Indo Count Industries, Kitex, Pearl Global, Himatsingka Seide, SP Apparels, Trident, and Vardhman Textiles, experienced significant gains. Shares of Gokaldas Exports and KPR Mill both rallied 20%, hitting their respective upper circuits. These companies, which derive a substantial portion of their revenue from the US market, are poised to benefit significantly from the reduced tariffs.
Impact of the Trade Deal
The India-US trade deal is expected to have a far-reaching impact on the Indian economy. Prime Minister Narendra Modi and President Donald Trump announced the trade deal late Monday night. The agreement lowers tariffs on Indian exports to 18%, making them more competitive compared to garment-exporting hubs like Vietnam and Bangladesh, which face tariffs of around 20%. This reduction in tariffs is anticipated to lower landed costs for Indian exporters in the United States, enhancing their pricing power, widening margins, and boosting order flows from major American buyers.
Broader Economic Benefits
The trade deal is not just about tariffs; it also encompasses a commitment from India to reduce tariff and non-tariff barriers on US goods to zero. This move is expected to create more jobs, spur growth, and promote innovation in both economies. The agreement signals a positive turn in the bilateral relationship between India and the US.
Analysts' Views
Analysts believe that the India-US trade deal will trigger a strong rally in Indian stocks and provide significant relief to the financial markets. They anticipate rallies in the rupee and short-term rates, with sectors like textiles, gems and jewellery, chemicals, cables, and new energy areas poised to benefit. Nuvama Institutional Equities noted that labor-intensive sectors like textiles stand to gain significantly, boosting exports and employment generation in India.
Challenges and Opportunities
While the trade deal presents numerous opportunities, it also poses some challenges. For instance, India has agreed to phase out Russian oil and pivot toward US and Venezuelan crude. While this move secures competitiveness for exports, it may hurt margins for refining companies in the short term.
Expert Opinions
According to Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS, the reduction in US reciprocal tariffs to 18% is expected to shift investor attention toward export-oriented sectors. He highlighted textiles and apparel, auto ancillaries and engineering, specialty chemicals, agro and seafood exports, and select electronics and consumer manufacturers with US exposure as key sectors that could benefit.
The India-US trade deal marks a significant milestone in the economic relations between the two countries. The reduction in tariffs is expected to boost Indian exports, enhance competitiveness, and drive economic growth. While challenges remain, the overall outlook for Indian textile companies and other export-oriented sectors is positive.