Textile Stocks Surge as Government Scraps 11% Cotton Import Duty
The Indian government announced the removal of an 11% duty on raw cotton imports for a 42-day period ending September 30. This decision led to a rally in textile stocks, with Vardhman Textile, Welspun Living, Gokaldas Exports, and Arvind seeing significant gains. Vardhman Textile was the top gainer with a 9.38% increase. The government described the move as necessary and in public interest, potentially in response to recent U.S. tariffs. The duty removal is expected to benefit the entire textile value chain, including yarn manufacturers, fabric producers, garment makers, and the made-ups sector.
*this image is generated using AI for illustrative purposes only.
In a significant move that sent ripples through the textile industry, the Indian government announced the removal of the 11% duty on raw cotton imports for a 42-day period ending September 30. This decision triggered a rally in textile stocks, with several companies seeing substantial gains in their share prices.
Market Response
The stock market responded positively to the news, with several textile companies experiencing notable increases:
| Company | Price Change | Closing Price |
|---|---|---|
| Vardhman Textile | +9.38% | ₹447.80 |
| Welspun Living | +6.40% | ₹124.60 |
| Gokaldas Exports | +3.57% | ₹752.00 |
| Arvind | +2.95% | ₹301.90 |
Vardhman Textile emerged as the top gainer among the highlighted stocks, with its shares soaring by 9.38% to close at ₹447.80. Welspun Living also saw significant investor interest, with its stock price climbing 6.40% to ₹124.60. Gokaldas Exports and Arvind followed suit, registering gains of 3.57% and 2.95%, respectively.
Government's Rationale
The government described the duty removal as both necessary and in the public interest. This move is perceived as a response to recent tariffs imposed by the United States, although specific details about these tariffs were not provided in the announcement.
Impact on the Textile Value Chain
The temporary exemption from import duty is expected to have far-reaching effects on the entire textile value chain. Industries likely to benefit include:
- Yarn manufacturers
- Fabric producers
- Garment makers
- Made-ups sector
By removing the import duty, the government aims to provide short-term relief to these sectors, potentially helping them to remain competitive in the global market.
Looking Ahead
While the stock market's initial reaction has been positive, the true impact of this policy change will unfold over the coming weeks. Industry observers will be keenly watching how companies leverage this temporary relief and whether it translates into improved performance across the textile sector.
As the September 30 deadline approaches, stakeholders will also be anticipating the government's next moves regarding cotton import policies and their potential strategies for supporting the textile industry.
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