India-UK FTA boosts textile sector, shares surge by 5-12%

Synopsis

The landmark Free Trade Agreement (FTA) eliminates existing tariffs connected textile commercialized betwixt the 2 countries. As per an Elara Capital report, textiles and apparel commercialized is astatine $1.42 billion, with India exporting astir the full quantum.

Mumbai: Shares of textile companies and garment makers surged Wednesday connected expectations the bilateral commercialized woody with the UK volition assistance grow the support beingness of Indian brands successful British retail outlets that presently root importantly much from low-cost producers specified arsenic Bangladesh.

The landmark Free Trade Agreement (FTA) eliminates existing tariffs connected textile commercialized betwixt the 2 countries. As per an Elara Capital report, textiles and apparel commercialized is astatine $1.42 billion, with India exporting astir the full quantum.

Shares of Welspun Living were the apical gainer connected BSE, up 12%, followed by Gokaldas Exports, Indo Count Industries, KPR Mill and Vardhman Textiles up 4.7% to 11.7% astatine close. The BSE 500 scale was up 0.5% connected Wednesday.

"The India-UK FTA removes 8-12% tariffs connected Indian textiles, making exports to the UK cheaper and much competitive," said T Manish, probe expert astatine Samco Securities. "This gives Indian exporters a wide outgo vantage implicit rivals specified arsenic Bangladesh and Vietnam, perchance boosting margins oregon enabling terms cuts to summation marketplace share."

Manish said the UK is India's third-largest textile export market, and the statement offers meaningful country for maturation of Indian textile companies.

Manish said helium prefers Gokaldas Exports, Kitex Garments and KPR Mill successful this sector, and sees 20% upside successful these stocks.

Shares of textile companies person had a mixed show this year, with Welspun Living down 17%, Vardhman Textiles down 2%, Gokaldas Exports and KPR Mill up 6% and 19%, respectively, successful the past six months.

The BSE 500 scale is down 3.3% successful this period.

Analysts astatine Elara Capital said the FTA is simply a beardown catalyst for Indian textile exporters, arsenic the removal of import duties would amended terms competitiveness and thrust measurement growth, successful a enactment to clients.

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