Headline Says Tariff Pain for Textiles — The Real Winners Are in Electronics Manufacturing

Headline Says Tariff Pain for Textiles — The Real Winners Are in Electronics Manufacturing

The headlines today are grim for India’s textile sector. ICRA reports that US tariffs have dragged India’s apparel export growth to a modest 1.5%, while a fresh Section 301 investigation by the Trump administration revives tariff pressure on Indian goods. Meanwhile, India and the US resumed trade talks in Washington, and an India-EU trade deal is reportedly days away.

But here’s what most investors are missing: while textile stocks bleed from US tariff uncertainty, a parallel set of trade deals and PLI incentives are quietly supercharging India’s electronics manufacturing sector. The real money is moving to EMS (Electronics Manufacturing Services) companies, medical device exporters, and pharma API makers who are positioned to capture share as global supply chains shift away from China.

The Pain: Textile Exporters Caught in the Crossfire

Celebrity Fashions (CELEBRITY) — a Chennai-based garment exporter — laid out the damage plainly in their FY25 annual report: "The US absorbs about 29% of Indian textile and apparel exports, roughly $10.3 billion. India’s garment exports total around $35 billion annually, with roughly a third, about $12 billion, destined for the US market." The company warned that "the 50% tariff effectively raises the cost for U.S. importers, forcing them to make a difficult choice: absorb the higher cost, ask Indian suppliers to take a hit on their margins, or divert their sourcing to other, lower-tariff countries." K.P.R. Mill (KPRMILL), one of India’s largest vertically-integrated textile companies with revenue of ₹4,396 crore in FY24, acknowledged the tariff headwinds in their FY25 annual report but pointed to a silver lining: "The India-UK FTA offers a big boost to the Indian Textile Industry, which is currently facing export challenges due to volatile US tariff rates. This pact opens major opportunities for India’s textile sector especially garments to strengthen its market share in the UK."

India’s textile exports still grew 6.32% in FY25 per industry body CITI, as per KPR Mill’s FY25 annual report, with the apparel segment being the main growth driver — but that growth came from diversifying away from the US into the UK and EU, not from US demand.

The Hidden Winners: Electronics Manufacturing

While tariff headlines dominate, a much bigger story is playing out in electronics. New trade pacts are opening global doors for India’s electronic contract manufacturers, and the PLI scheme is creating a manufacturing ecosystem that didn’t exist five years ago.

Dixon Technologies (DIXON) reported consolidated revenue of ₹17,690 crore in FY24, up 45% from ₹12,192 crore in FY23, per their FY24 annual report. Their mobile and EMS division emerged as the largest growth driver, contributing over 60% of consolidated revenue. Dixon manufactured 15 million smartphones and 38 million feature phones during the year, with annual capacity now at 50 million smartphones across four plants in Noida. The company secured PLI 2.0 approval for IT hardware and has orders from global brands like Lenovo and ASUS for manufacturing notebooks and tablets. Dixon is also pushing into automotive and defence electronics — aligning with the government’s Make in India initiative. EPACK Durable (EPACK) booked ₹375 million in operating revenue under the PLI scheme in FY25, per their annual report. Their Sri City facility in Andhra Pradesh boosted production capacity by 50%. The company manufactures critical components like PCBA controllers and heat exchangers at facilities in Bhiwadi, Dehradun, and Sri City — reducing import reliance. EPACK is now evaluating participation in the new Electronics Component Manufacturing Scheme (ECMS), a PLI initiative to boost domestic manufacturing of electronic components and sub-assemblies. Amber Enterprises (AMBER) has diversified beyond room ACs — the segment’s revenue contribution dropped from 72% in FY18 to just 40% in FY24, per their annual report. Their electronics division, particularly PCB assembly, is expanding into telecom, automobile, smart metering, defence, and medical electronics. The company signed an MoU with South Korea’s Korea Circuit to strengthen their PCB capabilities, positioning for the China+1 supply chain shift.

Medical Devices: The Quiet Beneficiary of India-UK FTA

Today’s news also flagged that India will reduce import duties on medical devices covered under the PLI scheme as part of the FTA with the UK. This creates a two-way opportunity: lower duties on imports boost the domestic healthcare ecosystem, while reciprocal access to the UK market benefits Indian device exporters.

Poly Medicure (POLYMED), a leading medical device manufacturer, noted in their FY23 annual report that India exported USD 2.9 billion worth of medical devices in FY 2021-22, with a growth rate of 15.47%. The USA was the top export destination at 21.6%, followed by Germany (4.4%) and France (3.1%). With the India-UK FTA, companies like Poly Medicure — which specializes in disposables and consumables that account for 47% of India’s medical device exports — stand to gain direct access to one of the world’s largest healthcare markets.

What Retail Investors Should Do

The reflex reaction to tariff headlines is to dump export-oriented stocks. But the filing evidence tells a more nuanced story. Textile exporters like KPR Mill are already pivoting toward EU and UK markets. The real structural winners are in electronics manufacturing — companies like Dixon, EPACK, and Amber are riding PLI incentives and global supply chain realignment to build capacity that will generate revenue for years. Medical device exporters like Poly Medicure benefit from both the PLI scheme and new FTAs.

Rather than panic-selling on tariff news, consider where capital is actually flowing: into Indian manufacturing facilities that global brands are increasingly choosing over Chinese alternatives. The headlines say pain — the filings say opportunity.

Data sourced from company filings on NSE via Xaro.