The rating agency expects India’s real GDP growth to slow by around 0.3 percentage points from its current forecast of 6.3 per cent for the fiscal year ending March 2026
Moody’s said that much wider tariff gap compared with other Asia-Pacific countries would severely curtail India’s ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics
US President Donald Trump’s steep 50 per cent tariffs on Indian imports could severely undermine India’s manufacturing ambitions and slow economic growth, Moody’s Ratings said on Friday.
Trump imposed an additional 25 per cent tariff on Indian goods on Wednesday, citing New Delhi’s continued purchases of Russian crude oil, taking the total tariff to 50 per cent — far higher than those levied on other Asia-Pacific countries.
Moody’s said India’s real GDP growth may slow by around 0.3 percentage points from its current forecast of 6.3 per cent for the fiscal year ending March 2026.
“Beyond 2025, the much wider tariff gap compared with other Asia-Pacific countries would severely curtail India’s ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics, and may even reverse some of the gains made in recent years in attracting related investments,” the ratings agency said.
Reducing Russian oil imports to avoid penalty tariffs could also make it harder for India to secure alternative crude supplies in sufficient quantities, Moody’s said.
A larger import bill would widen the current account deficit, especially amid weaker tariff competitiveness that could deter investment inflows.
“We expect there will likely be a negotiated solution that falls between the two scenarios described above,” Moody’s said.
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