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Textile Sector - US and India likely to sign trade deal during upcoming ASEAN summit; US tariff expected to be lowered at 15%

ICICIdirect Research 24 Oct 2025 DISCLAIMER

As per media report, US and India is likely to sign trade in the upcoming ASEAN summit to be held in Malaysia between 26-28th October.
Tariff rate imposed on India will be reduced to 15% from the current 50%. Tariff rate on major textile exporting countries such as Vietnam and Bangladesh is 20% and 35% respectively.
If the deal is sign at the lower rate of 15%, it will provide competitive edge for India in the textile and garment exports over other countries.
India’s share in US home textile (bed sheet/terry towel) is 46%/39% and cotton apparels is 11.7%. With lower tariff rates we expect India’s share in US textile exports to improve in the coming years.
Q2FY26 and Q3FY26 will feel the pinch of higher tariff rates with expected in dip in the EBIDTA margins. However, the same will bottom-out in Q3FY26 if deal gets sign at the end of Oct,25.
For overall textile sector we expect the benefit of US-India trade deal and UK-India FTA deal to flow in FY27.
Textile companies’ stocks are trading substantially lower to its 52 weeks high and provides an opportunity to enter the space with attractive valuations. We maintain Gokaldas Exports, Indo Count Industries and KPR Mills as our preferred picks in the space.
Trade deal with lower tariff rates is also positive for gems and jewellery sector. Amongst our coverage universe -Titan company will be one of the key beneficiaries.
   
 

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