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Investing.com -- U.S. President Donald Trump’s steep 50% tariffs on Indian imports could severely undermine India’s manufacturing ambitions and slow economic growth, according to Moody’s Ratings.
The rating agency said on Friday that India’s real GDP growth may slow by around 0.3 percentage points from its current forecast of 6.3% 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," Moody’s said.
The agency also noted that reducing Russian oil imports to avoid penalty tariffs could make it harder for India to secure alternative crude supplies in sufficient quantities.
A larger import bill would widen India’s current account deficit, especially amid weaker tariff competitiveness that could deter investment inflows.
Moody’s expects there will likely be a negotiated solution that falls between the two scenarios described in their analysis.
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