The shares of textile and shrimp companies dropped in trade on August 28 after US increased its tariffs on Indian imports to a whopping 50 percent. These export-oriented stocks extended significant losses.
US President Donald Trump's additional 25 percent tariff took effect yesterday (August 27), effectively taking import tax on Indian imports to as high as 50 percent. As stock markets were then closed on account of Ganesh Chaturthi, the impact of the tariffs can be seen today (August 28).
The 50 percent tariff on Indian imports is significantly higher than all Asian peers. Bangladesh and Vietnam, which compete with Indian textile exporters to the US, will pay 20 percent tariff instead. This will likely bear a strong impact on the export-oriented textile companies.
KPR Mill and Raymond Lifestyle shares dropped around 3 percent in the early trading hours, while Gokaldas Exports were down nearly 1 percent. Welspun Living shares fell nearly 2 percent, while Trident shares were down over 1 percent.
Shrimp feed companies also derive a major portion of their revenue from imports to the US. Notably, US was the top importer of Indian frozen shrimps in 2024-25, said Marine Products Export Development Authority (MPEDA). “As for overseas markets, USA continued to be the major importer of Indian seafood in value terms with an import worth US$ 2,714.94 million, with volume handled 3,46,868 MT. Exports to the US increased by 6.50 per cent in US dollars, 8.76 per cent in rupee value and 5.37 per cent in volume. Within USA's seafood import basket by India, frozen shrimp continued to be the principal item with share of 92.55 per cent in terms of US dollar,” it said in a press release.
Hence, the higher tariffs will likely bear a strong impact on their margins. Apex Frozen Foods shares tumbled around 5 percent in the early trading hours, while Avanti Feeds shares were down nearly 4 percent. Avanti Feeds generated 77 percent of its total revenue from the North American market in the January-March quarter. Apex Frozen generated 53 percent of its total revenue from US during the period.
"The 50% tariff imposed on India which has already come into effect will weigh on market sentiments in the near-term. But the market is unlikely to panic since the market will view this high tariffs as a short-term aberration which will be resolved soon. The U.S. treasury secretary Scott Bessant’s comment that “ at the end of the day India and U.S. will come together” indicates the likely outcome. The market will discount this outcome without panicking…In the near-term, with the export sectors facing headwinds, smart money will be chasing fairly valued domestic consumption themes. Investors can consider moving money from over-valued smallcaps to the safety of fairly valued largecaps with focus on domestic consumption," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
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