Cotton Duty Waiver Lifts Textile Stocks, But US Tariffs Cast Long Shadow

Market Performance

Textile stocks saw renewed momentum in the stock market today as India temporarily removed duties on raw cotton imports till September 30. Shares of Vardhman Textiles, Ambika Cotton Mills, Gokaldas Exports, and Indo Count Industries gained attention, reflecting a wave of positive sentiment.

The duty-free move gives companies immediate cost relief at a time when margins are under pressure. But the sector’s larger challenge—steep tariffs imposed by the US—still hangs heavy over its prospects.

Main News

The government’s decision to allow duty-free cotton imports offers short-term breathing space. Lower input costs strengthen the supply chain and bring competitiveness across yarn, fabric, garments, and home textiles.

However, the relief is overshadowed by the US tariff hurdle:

• From August 27, Indian exports will face 50% tariffs from the US administration.
• A scheduled visit by US trade negotiators to New Delhi (Aug 25–29) has been cancelled.
• Hopes of progress on a bilateral trade agreement are delayed, along with expectations of a cut in the additional 25% levy.

This double blow makes Indian exports significantly costlier compared to global rivals.

Company Details

Vardhman Textiles

• Exports around 30–35% of yarn to Bangladesh, shielding it from direct US tariff pressure.
• Sees scope for margin improvement as duty-free cotton lowers raw material costs.
• Business disruption has been limited so far.

Ambika Cotton Mills

• Benefits from reduced cotton duty, though broader tariff concerns may weigh on export competitiveness.
• Focus remains on sustaining margins amid volatile input costs.

Gokaldas Exports

• Derives nearly 70% of its revenue from North America.
• Faces significant exposure to the US tariff structure.
• Diversification efforts underway: Exports to the EU rose to 13.4% in Q1FY26, up from 11.6% in Q4FY25.

Indo Count Industries

• Exports contribute about 70% of total sales, with the US as its primary market.
• Heavy dependence makes tariff pressure a direct hit to profitability.

Tariff Pressure in Numbers

Indian exports now face some of the steepest levies in the textile trade:

• Carpets: 52.9%
• Knitted garments: 63.9%
• Woven garments: 60.3%
• Textiles & made-ups: 59%

These levels make Indian goods less competitive against Bangladesh (20% duty), Vietnam (20%), and China (30%).

Summary of the Article

The waiver on cotton import duty has lifted sentiment in the stock market today, giving Vardhman Textiles, Ambika Cotton Mills, Gokaldas Exports, and Indo Count Industries a much-needed breather. But the optimism is tempered by the US tariff wall, which threatens to erode competitiveness in India’s largest export market.

Unless companies accelerate diversification beyond the US and adapt pricing strategies, the road ahead may remain bumpy despite short-term relief on costs.