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Informist, Tuesday, Feb. 3, 2026

 

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--Moody's: US tariff cut to reinvigorate India's goods export growth to US
--Moody's: US tariff cut credit positive for India's labour intensive sectors 
--Moody's: India pharmaceuticals sector may not be affected by US tariff cut
--Moody's: India consumer electronics may not be affected by US tariff cut 
--Moody's: Ceasing Russia oil buys may be disruptive to India econ growth
--Moody's: Buying oil from non-Russia sources may increase India inflation 

 

NEW DELHI – The reduction in tariffs by the US on India's exports is credit positive for export-heavy and labour-intensive sectors such as gems, jewellery, textiles and apparel, Moody's Ratings said in a note Tuesday. US President Donald Trump announced late Monday that he and India's Prime Minister Narendra Modi had agreed to a trade deal, bringing down the reciprocal tariff on India's exports to the US to 18% from 25%. 

 

The reduction of tariff rates will reinvigorate the growth of India's goods exports to the US, which was its largest export destination at 21% of total goods exports in Jan-Nov 2025, the ratings agency said. After the frontrunning of exports before tariffs came into effect, the growth rate of India's goods exports to the US has flatlined in recent months.

 

The US imposed a 25% reciprocal tariff on India's exports in early August. There was no official clarity on whether India's exports would still carry the 25% penal tariff introduced by the US in end-August, which had effectively led to tariffs of 50% on India's exports.

 

"However, pharmaceuticals and consumer electronics, the other two major export sectors, had been exempt from the 50% high tariffs and therefore are unlikely to be affected by the tariff reduction," Moody's said. 

 

The two sides concluded the trade deal during Indian External Affairs Minister S. Jaishankar's three-day visit to the US that started Monday. India has committed to cut tariff and non-tariff barriers for US goods to zero, Trump said in a post on Truth Social. Modi's post on social media site X, however, did not confirm the commitment of zero duty on American goods.

 

According to Trump's post, New Delhi has also assured Washington that India will stop buying Russian oil, and instead buy energy products from the US and potentially Venezuela. The Indian prime minister did not specify this either in his post. The US administration has imposed tariff and non-tariff sanctions on some of Russia's largest oil refiners. It has also tried to boost production of Venezuelan crude refined by the US after capturing the South American nation's President Nicholas Maduro in early January. 

 

Moody's said India's economic growth could be disrupted and imported inflation could rise if it completely stops purchasing crude oil from Russia. The rating agency was of the view that a complete cessation of oil buys was unlikely because of the potential disruptiveness, even as India had reduced its crude purchases from Russia in recent months.

 

"A complete shift toward non-Russian oil could also tighten supply elsewhere, raise prices and pass through to higher inflation given that India is one of the world's largest oil importers," Moody's said.

 

Data from global trade analytics firm Kpler showed India's import of Russian crude was at 25% of its total oil imports in December, down from 38% in November. In absolute terms, the imports fell 35% on month to 1.2 million barrels, its lowest in three years. India had increased its reliance on Russian oil as it attracted sanctions from the West. Meanwhile, imports from the US had risen to a four-year high in October.  End

 

US$1 = INR 90.40

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Avishek Dutta

 

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