Arvind, Trident, Alok Industries, Gokaldas Exports surge up to 7% after India curbs garment imports from Bangladesh

Shares of textile makers such as Arvind, Trident, Alok Industries, Gokaldas Exports, Page Industries, Welspun Living, Indo Count, Lux Industries, Aditya Birla Fashion and Retail and Siyaram Silk rose between 1%-7% in trade on Monday after government over the weekend announced curbs on entry of Bangladesh's ready-made garments into India.

Shares of Arvind rose 4.2%, Siyaram Sil advanced 7%, Page Industries advanced 1.8%, Aditya Birla Fashion and Retail jumped 4.4%, Trident rose 2.8%, KPR Mill gained 3%, Alok Industries rose 4.7%, Indo Count gained 1.2% and Raymond Life rose 1.2%.

Government on Saturday decided to allow entry of ready-made garments from Bangladesh only through Kolkata and Nhava Sheva sea ports and barred imports of a range of consumer items through land transit posts in the northeast -- a move that is set to significantly hit Dhaka's trade with New Delhi.

Besides ready-made garments, plastics, wooden furniture, carbonated drinks, processed food items, fruit flavoured drinks, cotton and cotton yard waste will not be allowed to enter India through land customs stations and check posts in Meghalaya, Assam, Tripura and Mizoram, and Phulbari and Changrabandha in West Bengal, according to the notification.

The new restrictions for Bangladeshi consumer goods came over five weeks after New Delhi ended a nearly five-year-old arrangement for trans-shipment of Bangladeshi export cargo to third countries via Indian airports and ports.

India's fresh restrictions on limiting access to Bangladeshi exports appears to be in response to Dhaka denying certain value added items from the Northeast to enter that country through the land transit points.

Textile shares on a roll

Shares of textile makers have been witnessing strong buying interest after the United States (US) President announced 90-day pause on reciprocal tariffs last month. Analysts said that India and United Kingdom signing free trade agreement also augurs well for Indian textile makers.

Credit ratings agency ICRA in a report said that India's textile export volumes to the UK to double from their current levels in the next 5-6 years post implementation of the revised tariffs, leading to an addition of incremental capacities.

“Indian apparel exporters’ competitive positioning would strengthen considerably with elimination of import duties by the UK. Exports from existing manufacturing hubs such as Tirupur, Surat, Delhi-NCR are likely to improve. Also, operationalisation of the FTA will aid Indian home textile exporters in augmenting their presence in the UK retail and commercial sectors, including hospitality and healthcare,” ICRA said.

The UK retail giants are likely to expand their sourcing from India for cost-effective production and diverse product offerings facilitated through the FTA. This shift will benefit Indian suppliers boosting their revenues and enhancing their reputation in the global apparel industry, ICRA added.

Meanwhile, the decision to allow entry of ready-made garments from Bangladesh only through Kolkata and Nhava Sheva sea ports is likely to increase the cost of apparel imports from the neighbouring nation, textile industry bodies said on Sunday.

They also termed the move a timely step towards preventing the dumping of foreign-made garments and strengthening India's self-reliance in apparel production.

As of 10:48 am, shares of most of the textile makers were trading higher in an otherwise lacklustre market.