Textile sector capex hits highest in over 14 yrs, trade deals boost outlook

Textile companies have invested big on new factories and similar capital expenditure even before the India-US deal was announced.

 

The total value of new project announcements for the year ending December 2025 was Rs 44,019 crore, the highest on a rolling 4-quarter basis since at least 2011, shows a Business Standard analysis of data from the Centre for Monitoring Indian Economy (CMIE).

 

The US trade deal announced on Monday cut the tariff rate on India from 50 per cent to 18 per cent. This makes it more favourable for Indian textile companies to export their goods relative to neighbouring country Bangladesh, and Vietnam, which have higher tariffs (20 per cent each).

 

“It is not just the US, before the US we had FTA (free trade agreement) with the EU where textiles has been a focus area," said Manoj Mishra, partner, Grant Thornton Bharat. 

 

The sector has likely been banking on improved trade terms with a more favourable treatment relative to neighbouring countries like Bangladesh. The EU deal announced in January is set to remove the 12 per cent tariff on textiles when the new regime becomes effective in around one year. Government support in the form of a Production Linked Incentive (PLI) scheme encouraged capital expenditure, which also helped investments, Mishra added.

 

A parliament reply in August 2025 mentioned that the PLI scheme has an approved outlay of Rs 10,683 crore. 

 

The scheme has two parts. The first is aimed at companies with a minimum investment of Rs 300 crore and turnover of at least Rs 600 crore. The second would have a minimum investment of Rs 100 crore and minimum turnover of Rs200 crore per company to attract both the large-scale and micro, small and medium enterprises (MSMEs).

 

"The projected investment and turnover under the scheme is Rs 28,711 crore and Rs 216,760 crore, including exports, respectively. As on March 31, 2025, the total investment made by PLI participant companies is Rs 7,343 crore and the total turnover achieved is Rs 4,648 crore, including export of Rs 538 crore. Incentive of Rs 54.50 crore has been disbursed under the scheme in FY 2024-25," it added.

 

Among listed textile companies, Page Industries has mentioned ongoing capex plans in its November 2025 earnings call. 

 

“We plan to spend around Rs 140 crore in FY26, out of which in H1, we have spent around Rs 57 crore. So capex is largely towards completing the Odisha project and the K R Pet Part 2, that's what we call it. Odisha is largely done, but there are certain -- some capex is left out, which we'll be closing by the year-end,” said Chief Financial Officer Deepanjan Bandyopadhyay in the call.

 

Separately, Gokaldas Exports has announced ongoing capital expenditure in Madhya Pradesh, Karnataka and Jharkhand.

 

Listed companies in export-oriented sectors like textiles and auto-ancillary companies have seen some capital expenditure even amid the uncertainty, even as certain stocks have been beaten down because of tariff-related issues, according to independent market expert Ambareesh Baliga.

 

Some of these are now likely to see an improvement in sentiment in light of the US trade deal, and this is reflected in the uptick after the deal was announced, Baliga suggested. 

 

“Overall, the outlook is positive,” he said, barring any unexpected changes.

 

Auto companies which have ongoing capex include auto ancillary player Sona BLW Precision Forgings (Sona Comstar), which mentioned capex of around Rs 198 crore in its October 2025 earnings call. News reports have previously indicated $1 billion in capex by Maruti Suzuki for its electric vehicle push, and a $5 billion investment plan from South Korean car manufacturer Hyundai India.