SP Apparels, Welspun Living to Arvind: Why textile stocks surged up to 20% despite India-Pakistan tensions — Explained

Stock market today: While the Indian stock market traded in a narrow range on Wednesday, May 7, amid rising tensions between India and Pakistan, textile stocks were trading in the green.

These stocks, which had been buzzing lately, once again caught investors' attention on Wednesday, May 7, as a fresh wave of optimism emerged from India and the United Kingdom officially signing a landmark Free Trade Agreement (FTA). This development lifted market sentiment, with hopes that the Indian textile sector could be one of the major beneficiaries of the pact.

Amid this optimism, major textile companies saw their stocks soar in trade, with SP Apparels emerging as the top performer, hitting the 20% upper circuit limit at ₹874 apiece. Other textile stocks, such as Gokaldas Exports, Welspun Living, Vardhman Textiles, Nitin Spinners, Arvind, Himatsingka Seide, and Ambika Cotton Mills, surged up to 16% in early trade.

The deal between the world’s fifth- and sixth-largest economies has been concluded after three years of stop-start negotiations. It aims to increase bilateral trade by £25.5 billion ($34 billion) by 2040 through liberal market access and eased trade restrictions.

Indian textile exports set to gain under new India-UK FTA

The FTA holds enormous potential to enhance the competitiveness of the Indian textile industry in the UK market, where competing countries like Pakistan, Bangladesh, and Sri Lanka currently enjoy duty-free access under the UK’s Generalized Scheme of Preferences (GSP).

Such tariff concessions have not been available to India. Indian textile products such as women’s apparel, shirts, trousers, and bed linens, which currently attract a 10–12% import duty in the UK, are expected to benefit under the new agreement.

India is ranked among the top textile-exporting countries globally, with a share of approximately 4% of global textiles and apparel exports. The major export destinations for India in this segment are the United States (US), the European Union (EU), and the United Kingdom (UK), accounting for around 53% of total textile and apparel exports in FY 2023–24.

Trade between the two nations totaled £42.6 billion in 2024, with India ranked as Britain’s 11th-largest trading partner. The UK described the agreement as the “biggest and most economically significant” bilateral trade deal it has signed since leaving the European Union in 2020.

Apart from the UK, India has signed 14 Free Trade Agreements (FTAs), including those with the UAE, Australia, and TEPA with EFTA countries (Switzerland, Iceland, Norway, and Liechtenstein), as well as six Preferential Trade Agreements (PTAs) with various trading partners.

Policy support meets global opportunity

The Indian government has been increasing its focus on the textile sector, offering incentives and reforms to strengthen domestic manufacturing. In the Union Budget 2025–2026, the Indian government announced a five-year mission aimed at enhancing the productivity and sustainability of cotton farming.

This initiative aligns with the government’s integrated 5F vision for the textile sector. Experts believe this strategy will boost farmers' incomes and ensure a steady supply of high-quality cotton, supporting India’s traditional textile industry.

Additionally, ongoing political turmoil in Bangladesh has already led some global buyers to shift their sourcing to India. The latest developments add further momentum to this trend.

(With inputs from Reuters, Financial Express)

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