Moody’s Ratings on Indian Economy: American rating agency Moody’s in its latest Global Macro Outlook Report It has been said that India’s economy will grow at a speed of 7 percent in the year 2025 and then at a speed of 6.5 percent in the next year 2026. The rating agency said India’s economic growth is being driven by increasing investment in infrastructure and strong domestic consumption, although the private sector is still cautious in terms of capital expenditure (Capex).

India will remain the fastest growing economy

Moody’s said that India will remain the fastest growing economy among the G-20 countries in the coming years. The agency expects India’s growth rate to average 6.5% through 2027, supported by domestic demand and export diversification.

GDP estimates and global comparison

• GDP growth in 2024: 6.7%
  
• Projected GDP growth in 2025: 7%
  
• Estimate in 2026-2027: around 6.5%
  

According to Moody’s, this growth will be possible due to low inflation and neutral to accommodative monetary policy stance. For China, Moody’s has estimated that its economy will grow at a rate of 5% in 2025, but it may decline to 4.2% by 2027. At the same time, the GDP growth rate at the global level is estimated to be between 2.9% in 2024, 2.6% in 2025 and 2.5% to 2.6% in 2026-27.

Export and trade improvement

Moody’s reported that some Indian exporters facing US tariffs (50%) have succeeded in redirecting their exports. India’s total exports increased by 6.75% in September 2025, although exports to America recorded a decline of 11.9%.

According to Moody’s, India’s economic growth is structurally strong. Government infrastructure spending, consumption boom and stable monetary policy will keep India a key engine of global growth in the coming years.

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Moody’s Warns on Trans-Shipment Tariffs: The 40 percent trans-shipment tariff imposed by the US is expected to create major compliance problems for companies in India and the ASEAN region. Rating agency Moody’s has expressed concern in its report that this tariff may have a significant impact on the machinery, electrical equipment and semiconductor sectors.

US rating agency expressed apprehension

On July 31, US President Donald Trump had announced the imposition of a 40 percent tariff on goods that have been sent ‘through a third country to avoid duty’. This tariff will apply in addition to the broader country-level charges. Moody’s said in its report on Tuesday focused on ‘Trade in the Asia-Pacific region’ that it is not yet clear how the Trump administration will define ‘trans-shipment’. However, the target of this move is mainly goods produced in China, which are sent to America through third countries.

The rating agency said that the ambiguity related to transit fees poses a risk to the economies of ASEAN countries. If the US keeps this definition narrow and only includes goods imported, lightly processed or relabeled from China, the impact on regional economies will be limited.

Big impact on Indian companies!

Conversely, if the US adopts a broader interpretation of trans-shipments to include goods that contain any significant amount of Chinese content, it could cause severe economic harm to Asia-Pacific supply chains. According to the rating agency, the machinery, power equipment, consumer optical products and semiconductor sectors may face the most transit risks.

Moody’s also said that products transiting third countries are mostly in the form of ‘intermediate raw materials’ and not final consumer goods. The US rating agency said the tariffs would create major compliance challenges for ASEAN’s private sector. Exporters will face additional vigilance and certification requirements to prove ‘significant transformation’ of products to avoid US tariffs.

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