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Textile Companies – RoDTEP impact non-material for textile companies in our coverage; Lower tariffs of 15% will ease margin pressure in near term.

ICICIdirect Research 27 Feb 2026 DISCLAIMER

The government has halved benefits under the RoDTEP scheme for exporters in textiles restricting incentives to 50% of notified rates and value caps with immediate effect from 24th February 2026.
Further, the FY27 allocation towards RoDTEP in the budget was cut to Rs.10,000cr from earlier allocation of Rs.18.232cr in FY26. The RoDTEP rates will now stand in the range of 0.8%-1% against 2% earlier for companies such as Indo Count in our coverage.
RoDTEP (Remission of Duties and Taxes on Export Products) is applicable majorly to yarn, fabric and home textile manufactures. Apparel, garments specified under Chapter 61 & 62 and Made-ups under Chapter 63 derive export benefits through RoSCTL (Rebate of State and Central Taxes and Levies).
Indo Count Industries avail RoDTEP benefits on filled products. Their filled product export revenues for FY25 stood at Rs.250cr with benefits under the scheme at Rs.4.9cr (1.9% of the filled product revenue). Post the revision by government, the benefits will decline from Rs.4.9cr to Rs.2.4cr. Overall, this is immaterial compared to total revenues of Indo Count (Rs.4151.4cr in FY25). There will be no impact on EBITDA margins due to the change in RoDTEP benefits for Indo Count Industries.
Gokaldas Exports and Pearl Global Industries avail benefits under RoSCTL. The government has not announced any revision of rates for RoSCTL. The benefits under RoSCTL as of FY25 for Gokaldas Exports and Pearl Global Industries stood at ~Rs.120cr and ~Rs.72cr respectively.
If similar order follows for RoSCTL, we expect ~140bps and ~75bps impact on EBITDA margins of Gokaldas Exports and Pearl Global Industries respectively.
Further, US President, Donald Trump has announced 15% tariffs (implemented 10% tariff) for 150 days on all countries starting 24th February 2026 post the supreme court ruling on tariffs being illegal in nature.
View: Overall, the recent government order on RoDTEP will not have any material impact on the revenues and EBITDA margins of the textile companies under our coverage. The recent development regarding 10% tariffs for next 150 days is positive for the textile companies (vs 18% announced earlier). The 4 key positive elements are 1) Easing of pressure on margins with immediate effect 2) India has advantage of securing holiday season orders and deliver it quickly by end of August 2026 3) India has an advantage of negotiating a better tariff deal with the US over the upcoming months 4) India will not have any impact on competitiveness as earlier tariff of 18% was also in-line with tariff rate of other countries such as Bangladesh and Vietnam (19% & 20%).
 

 

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