Athira Sethu
Kochi, 21 May 2025
India is in a better position than many other developing countries to deal with US tariffs and problems in global trade. This is because India has strong growth within the country and doesn’t depend too much on selling goods to other countries, according to a new report by Moody’s Ratings.
Moody’s reported that the Indian government has made moves that have helped shield the economy. These moves include persuading citizens to spend more, constructing additional factories, and investing more in public roads, railways, and other construction. All these assist the Indian economy to remain robust even if the global market is slowing down.
Inflation, or the increase in prices, is also decreasing. If this keeps going, the Reserve Bank of India can cut interest rates. This would reduce the cost of loans and enable people and companies to spend more, which also helps the economy.
Indian banks also have sufficient funds to lend, supporting the growth of businesses and keeping the economy functioning.
India’s economy is large and not too dependent on international trade, according to Moody’s. That is why it can cope with external issues better than the others.
The report also discussed tensions between India and Pakistan that have recently been escalating. Moody’s stated that this is more likely to damage Pakistan’s economy than India’s. The majority of India’s major cities and business districts are away from the border, and the two countries have very little trade relations. But if the war continues for a long time, then India would need to increase its defense spending, and this could hinder other government spending.
Moody’s further stated that certain Indian sectors, such as automobile makers shipping their products to the US, may experience some impact from international trade problems. However, India’s robust services sector and emphasis on domestic demand will prevent the economy from fluctuating.
Although Moody’s recently reduced its growth rate prediction for India in 2025 from 6.7% to 6.3%, it remains the highest among the G-20 nations.
Earlier this year, the US imposed new tariffs on certain products, such as steel and aluminium. These have been temporarily suspended for 90 days, but underlying tariffs remain at 10%. India should be better equipped to handle these changes than many others.
