Synopsis:
India extended cotton import duty exemption till 31st December, easing costs for textile firms like Vardhman hit by U.S. tariffs and weak demand, though concerns remain over farmer impact during the peak harvest season.
During Thursday’s trading session, shares of India’s largest vertically integrated textile manufacturer and largest producer of yarn moved up by around 15.5 percent on BSE. But what has triggered this sharp rally? Let’s break it down in this article.
With a market cap of Rs. 13,008 crores, the shares of Vardhman Textiles Limited closed in the green at Rs. 449.75 on BSE, up by around 13 percent, as against its previous closing price of Rs. 398.15. The stock has delivered negative returns of around 12 percent in the last one year, and has fallen by over 2 percent in the last one month.
What’s the News
Following the recent imposition of 50 percent U.S. tariffs that raised concerns over job losses in the textile industry, India – the world’s second-largest cotton producer – extended the exemption on cotton import duty until 31st December. The extension is expected to help textile companies like Vardhman Textiles secure long-term cotton import contracts.
Manufacturers had earlier indicated that the previous exemption, valid only until 30th September, was too short a window to place fresh orders and would primarily benefit shipments already in transit.
According to sources, India is likely to source cotton from countries with surplus supplies for export, including Australia, Brazil, the United States, and several African nations.
The U.S. remains India’s largest export market for garments and jewellery, with shipments valued at nearly $22 billion in 2024. India holds a 5.8 percent share of the American garment market, ranking behind China, Vietnam, and Bangladesh.
The Indian textile industry has long sought the removal of import duty on cotton, but the government has generally retained an 11 percent duty to safeguard the interests of small cotton farmers. In May 2025, cotton was among the four crops that received one of the sharpest hikes in Minimum Support Price (MSP), as domestic production had been on a declining trend.
According to the Cotton Association of India, the duty exemption allows companies to import cotton at lower costs, helping ease pressures amid a slowdown in U.S. demand. However, extending the exemption until 31st December could affect farmers, as the cotton harvest begins in October and supplies typically reach the market by March (the peak season).
While the measure is primarily intended to support the industry against challenges such as high domestic prices and U.S. tariffs, sources indicated it may also be seen as a signal to Washington that India is open to importing more U.S. cotton.
Financials & more
Vardhman Textiles reported a marginal growth in its revenue from operations, showing a year-on-year increase of around 3.3 percent from Rs. 2,309 crores in Q1 FY25 to Rs. 2,386 crores in Q1 FY26.
In contrast, its net profit decreased during the same period from Rs. 240 crores to Rs. 208 crores, representing a decline of about 13 percent YoY. In Q1 FY26, the Yarn segment accounted for 62.2 percent of the company’s revenue, followed by Fabric at 36.3 percent, while Other segments contributed the remaining 1.4 percent.
In the yarn segment, Vardhman has already added around 17,000 spindles, while a further 15,600 spindles are scheduled for completion in H1 FY26. In addition, an open-ended project of 6,624 rotors is yet to commence.
On the fabric side, processed fabric capacity is set to increase by 31 million meters annually, with completion targeted for H2 FY26, while the Vardhman Performance Fabric (synthetic woven) division will add another 18 million meters annually in the same period.
The company is also implementing modernisation, automation, and technology upgrades in phases, expected to conclude by H2 FY26, alongside green capex initiatives that are planned through FY27. The total announced capex for all these expansions stands at Rs. 3,535 crore.
Vardhman Textiles Limited is engaged in the business of manufacturing cotton yarn, synthetic yarn and woven fabric. The company operates with an installed yarn capacity of over 1.2 million spindles, a grey fabric capacity of 1,500+ looms, and a processed fabric capacity of 180 million meters per annum. In garments, Vardhman has a production capacity of around 7,500 shirts per day.
Written by Shivani Singh
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