Union Budget 2025: Indian textile stocks surged in today's trade, February 01, after Union Finance Minister Nirmala Sitharaman in her budget speech announced a 5-year mission to facilitate improvements in productivity and sustainability of cotton farming.
“For the benefit of lakhs of cotton growing farmers, I am pleased to announce a ‘Mission for Cotton Productivity’. This 5-year mission will facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties. The best of science & technology support will be provided to farmers. Aligned with our integrated 5F vision for the textile sector, this will help in increasing incomes of the farmers and ensure a steady supply of quality cotton for rejuvenating India’s traditional textile sector,” Sitharaman said.
Against this backdrop, shares of Ambika Cotton Mills surged by 10% in intraday trading today, reaching ₹1,674. Other textile stocks, including KPR Mills, Vardhman Textiles, Welspun Living, S.P. Apparels, Nitin Spinners, Arvind, and Himatsingka Seide, also experienced rally ranging from 3% to 5%.
In recent years, apparel buyers have increasingly diversified their procurement sources, favoring India. This trend is supported by Government of India's (GoI) initiatives aimed at enhancing bilateral trade through agreements and treaties. Additionally, apparel buyers are consolidating their vendor lists, which benefits larger apparel manufacturers in India.
T Manish, Research Analyst, SAMCO Securities, “The five-year mission for cotton productivity aims to enhance the quality of Extra Long Staple (ELS) cotton varieties, fostering improved yields and sectoral growth. Despite stagnant to declining cotton seed prices, this initiative has the potential to strengthen the industry's outlook and benefit companies like Ambika Cotton.”
Naveen Malpani, Partner and Consumer Industry Leader, Grant Thornton Bharat, "The government's five-year mission to enhance cotton productivity with high-quality, long-staple varieties is a game-changer for India’s textile industry. As the world’s second-largest cotton producer, India’s textile and apparel exports stood at USD 35.87 billion in FY24, accounting for 8% of total merchandise exports."
"However, India continues to import cotton to bridge the demand-supply gap, affecting cost competitiveness. By boosting domestic productivity, this initiative will stabilize raw material availability, reduce import dependence, and enhance the global competitiveness of India’s textile sector, where 80% of capacity is driven by MSMEs," added Naveen Malpani.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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