Gokaldas Exports shares declined 6% to trade at Rs 703 apiece on the NSE. Trident shares fell 3%, while Pearl Global Industries and Arvind Fashions shares were down around 2% each in the morning trading hours of Tuesday.
Why are textile stocks falling today?
The government has cut the duty benefits available to exporters under the RoDTEP scheme by 50%. “RoDTEP benefits shall be restricted to 50% of the notified rates and value caps with immediate effect,” The Directorate General of Foreign Trade, in a notification, said. The move prompted exporters to urge the government to review the decision amid a demand slowdown and uncertainties.“With immediate effect, the applicable RoDTEP rates for all HS Lines as notified… shall be limited to 50% of the existing rates and, where applicable, 50% of the notified value caps,” DGFT said.
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The RoDTEP scheme refunds taxes and duties that are not rebated under any other scheme. The benefit rates under this scheme range between 0.3-4.3%.
“The reduction in RoDTEP rates and the 50% reduction in value caps come at a particularly difficult juncture, when Indian exports are already navigating significant global headwinds, including slowing demand, heightened uncertainty, and rising protectionist tendencies. We urge the government to review and reconsider this decision,” said S C Ralhan, President, Federation of Indian Export Organisations (FIEO).
“Halving RoDTEP rates will raise the cost of exporting from India by reducing refunds of domestic taxes that exporters cannot otherwise recover. In price-sensitive sectors, even a 1–2% increase in costs can decide whether orders are won or lost,” said GTRI founder Ajay Srivastava.
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Textile stocks:
Notably, textile stocks had seen an upstick following the announcement of the long-awaited trade deal between India and the US. However, they later declined after the US committed to reducing tariffs on certain Bangladeshi textile imports to zero, giving a competitive advantage to the Bangladeshi peers of these Indian firms.
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