Explained: Why Gokaldas Exports, KPR Mill and other textile stocks soared up to 8% on Monday

Shares of textile companies Gokaldas Exports, KPR Mill, Vardhman Textiles, Welspun Corp and others rallied up to 8% on Monday after the government announced a five-month exemption from customs duties on cotton imports, effective June 1, aimed at increasing the availability of raw material for the domestic textile industry.

Gokaldas Exports rallied 6% to its day’s high of Rs 735, while KPR Mill gained 4% to Rs 1,007 on the BSE. Vardhman Textiles soared 8% to Rs 621, while Trident shares rose 5% to Rs 25.39. Welspun Corp and Arvind Fashions traded largely flat.

The duty waiver, which will remain in place until October 30, is expected to lower input costs for textile and apparel manufacturers, particularly benefiting small and medium enterprises.

The decision is positive for textile companies as it is expected to improve raw material availability and reduce input costs. The move could support margins for spinners, fabric manufacturers and apparel exporters, particularly at a time when the industry is navigating cost pressures and competitive global markets. It is also expected to provide targeted relief to the industry and consumers while balancing the interests of domestic cotton farmers.

The temporary exemption comes amid concerns over tight cotton supplies and rising prices, which have increased production costs for textile firms.

By allowing cheaper imports, the government aims to ease supply constraints and stabilise the market ahead of the peak festival and export seasons.

Industry representatives said domestic cotton prices continue to be among the most competitive globally, while supplies from the current crop remain sufficient, reducing the immediate need for large-scale imports.“At current price levels, imports are not economically attractive,” Vinay Kotak, president of the Cotton Association of India, told Reuters.

However, Kotak noted that export-focused mills requiring contamination-free cotton may import around 600,000 bales during the duty-free period. Industry officials added that any imports are likely to be sourced from countries with surplus cotton supplies, including Australia, Brazil, the United States and several African nations.

Market participants will also closely monitor the progress of the monsoon. As cotton cultivation in India is predominantly rain-fed, any adverse weather developments could affect the new crop being sown from June. A weaker-than-expected monsoon or weather-related disruptions may impact production prospects and potentially increase the need for cotton imports in the coming months.

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