After facing months of delay, India-US trade deal is finally happening which will trim current reciprocal tariff on Indian exports to 18% from earlier 50%. Rating Agency Moody said, according to Reuters, that the reduction of US tariff rates on most Indian goods will give new energy to India’s goods export growth to the US.
The official data is yet awaited as the announcement came via social media post of US President Donald Trump and Prime Minister Narendra Modi confirming the deal and reduced tariff. However Moody’s expect labour-intensive sectors such as gems, jewellery, textiles and apparel sector to have positive impact as they were one of the worst impacted sectors after 25% additional tariff imposed on India totalling to 50%.
India unlikely to immediately end Russian oil purchases, says Moody’s
While Trump, in his Truth Social post, said that Prime Minister Modi has agreed to stop buying Russian oil and to buy much more from the United States and, potentially, Venezuela, Moody’s said the cessation will not be immediate.
“India is unlikely to cease all crude oil purchases from Russia immediately, as such a move could be disruptive to India’s economic growth.”
“A complete shift toward non-Russian oil by India could tighten supply elsewhere, raise prices and pass through to higher inflation,” Moody’s added.
Moody’s sees tariff relief boosting gems, textiles and apparel
“A lower tariff rate will be credit positive for labour-intensive sectors such as gems, jewellery, textiles and apparel,” Moody’s said according to Reuters.
Pharma and consumer electronics sector are unlikely to be affected by the reduction, according to Moody’s as it had been exempt from the 50% high tariffs.
According to a report by Reuters, India has also agreed to partly open up its highly-guarded agriculture sector, telecom and pharmaceuticals under the trade deal.
“The commitment to buy U.S. products covers sectors like pharmaceuticals, telecom, defence, petroleum and aircraft. It will be done over the years,” an Indian official told Reuters.