Moody’s stated that U.S. policy shifts like visa changes and outsourcing levies won’t significantly impact remittances or services exports, underscoring India’s economic resilience
New Delhi
Global ratings agency Moody’s has reaffirmed India’s long-term local and foreign-currency issuer ratings at Baa3 with a stable outlook. The rating also covers India’s local-currency senior unsecured debt. The agency said India’s credit profile continues to be supported by its large, fast-growing economy, a sound external position, and a strong domestic financing base to handle fiscal deficits.
Moody’s noted that the recent U.S. decision to impose higher tariffs on Indian goods will have limited short-term impact on growth. However, the agency warned that in the medium to long term, such measures may restrict India’s ambitions of building a high-value export manufacturing sector.
The report added that other U.S. policy shifts, including possible changes in skilled worker visas and new levies on outsourcing, are not expected to significantly hurt remittances or India’s services exports. These factors, Moody’s said, highlight India’s resilience despite external pressures.
At the same time, the agency cautioned that fiscal weaknesses remain a concern. India’s high government debt burden and weak debt affordability are unlikely to improve quickly, even though strong GDP growth and gradual fiscal consolidation are expected. Recent fiscal steps to boost private consumption could also slow revenue growth.
Moody’s had earlier estimated that the U.S. tariffs, announced under Donald Trump’s administration, could shave around 0.3 percentage points off India’s growth. Still, robust domestic demand and a strong services sector are expected to cushion much of the impact.
The Baa3 rating places India at the lowest investment-grade level, but with a stable outlook, reflecting confidence in the country’s economic fundamentals despite global challenges.
