Delilah D’ Souza
Daijiworld Media Network- New Delhi
New Delhi, May 21: India is in a strong position to manage the negative impact of US tariffs and global trade disruptions, thanks to its solid domestic growth, limited reliance on exports, and supportive government policies, according to Moody’s Ratings.
In its latest report, Moody’s noted that India’s internal economic drivers—including robust consumption, expanding manufacturing, and increased infrastructure spending—will help cushion the effects of slowing global demand.
“India is better positioned than many other emerging markets to deal with US tariffs and trade challenges, supported by a large domestic economy and minimal dependence on goods trade,” Moody’s stated.
Moody’s recently revised India’s GDP growth forecast for 2025 from 6.7% to 6.3%, citing global uncertainties. However, it still expects India to record the highest growth rate among G-20 countries.
The report highlighted that moderating inflation could lead to interest rate cuts, while healthy liquidity in the banking sector is supporting credit growth. Initiatives like personal income tax cuts and public infrastructure investments are also driving domestic consumption and GDP.
While India is largely shielded from trade disruptions, sectors like automobiles with export exposure to the US may face challenges. However, their diversified global operations help reduce risk.
On the geopolitical front, Moody’s said the recent India-Pakistan tensions, including a flare-up in early May, are likely to affect Pakistan’s economy more severely. It added that India’s key agricultural and industrial hubs are far from potential conflict zones and that economic ties between the two nations are limited.
Still, any increase in defense spending could strain India’s fiscal resources and slow the government’s efforts toward fiscal consolidation.
The US had earlier announced sweeping country-specific tariffs, including higher duties on steel and aluminium, but paused implementation for 90 days. India’s strong services sector and internal demand are seen as key buffers in navigating ongoing global trade challenges.