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Textile & Home textile: Opens up a large export market

ICICIdirect Research 19 Feb 2026 DISCLAIMER

India and the United States on 6 February announced an interim trade framework ahead of their Bilateral Trade Agreement (BTA), with removal of penal tariff of 25% for import of Russian oils on immediate basis while both countries will come up with official announcement of reduction in reciprocal tariff to 18% in the coming weeks.
Reciprocal tariff on Textile (including apparels) and home décor (including pillows, quilts and bed sheets) will be reduced to 18% which will make India competitive with the Asian countries such as China (30% tariff), Bangladesh (19% tariff) and Vietnam (20% tariff).
View:  BTA with US and FTA with EU/UK opens up a large export market of ~US$ 340bn (including Apparels and home textile), where India currently has 4.5% market share. With $8.2bn exports, India has 8% share in US’ apparel & home textile imports of $103bn. If India manages to gain 4% share in US textile imports, there will be potential increase of $4bn in textile exports to US in the coming years.
Similarly, India has opportunity to increase its share in apparel exports to EU and UK by having advantage of zero duty, availability resources in form of adequate cotton supply and labour force.
On the other hand, Bangladesh (largest apparel exporters in the world) has recently entered into deal with US reducing its tariff rate by 1% to 19%. Also, it was able to clock a competitive advantage of zero tariff on exports of apparels manufactured by using US cotton and yarn.   
View on Bangladesh zero duty advantage: We don’t expect the trade deal with Bangladesh to have material impact on the Indian textile manufacturers (1) There is possibility, which our commerce minister Piyus Goyal also confirmed that, India can also have similar clause in its final trade agreement to be signed by end of Mar,26 (2) Industry experts believes that shift in Bangladesh sourcing will take some time as the country will have to re-engineer its supply chain and bear higher cost 3) It will have to invest in new spinning and fabric processing capacity to meet US quality standards  and 4) Indian cotton can reach Bangladesh in less than a week while US cotton will take over month to reach Bangladesh. Overall, Bangladeshi textile companies will try to assess the margin attractiveness of zero tariff clause in its country’s trade deal with US.
Textile value chain to benefit from trade deals: Post the implementation of respective trade deals, the industry is expecting 15% CAGR growth in textile and apparel exports over the next two years. However, the growth will enhance with addition of new clients and increase in orders from existing clients in key markets such as EU and UK. This will lead to increase in demand for quality raw material (such yarn & fabrics) in the coming years.  Historically, Bangladesh imported yarn from India for its garment exports to US, EU and UK. Zero tariff trade deal US might shift some yarn demand from India to US. However, in the long run we expect yarn demand from Bangladesh will improve with growing textile exports from the country. Also, Bangladesh’s new leadership has proposed to improve tie-up with India, which augurs well for textile companies (including yarn manufacturers).

Preferred picks: Trade deals with US, UK and EU is structurally positive for textile companies from medium to long term perspective due to scale advantage by gaining access to large export market. We like Gokaldas Exports, Pearl Global Industries, KPR Mills and Indo Count Industries in the textile space.

View our research recommendation on Gokaldas Exports Ltd Also explore more on Research page

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