New Delhi, July 4 (KNN) India could face lower tariffs compared to many Asia-Pacific (APAC) nations, a factor that may boost investment inflows and strengthen its position as a global manufacturing hub, Moody鈥檚 Ratings said on Thursday.
In its latest outlook on Asia-Pacific sovereigns, Moody鈥檚 Ratings suggested that India’s favourable tariff position could enhance its appeal as a global manufacturing hub and attract greater foreign investment.
The report highlighted that several export-dependent APAC economies鈥攊ncluding Vietnam and Cambodia鈥攈ave recently been hit by steep US tariffs, particularly in April.
These developments, Moody鈥檚 warned, are disrupting trade flows, complicating investment decisions, and posing both cyclical and structural credit risks to the region.
鈥淚n contrast to countries like Cambodia and Vietnam, India has the potential to benefit from a tariff-induced redirection of investment and trade,鈥 Moody鈥檚 noted.
The agency added that India鈥檚 recent trade engagements鈥攑articularly the signing of a free trade agreement with the UK and ongoing negotiations with the European Union鈥攆urther support its manufacturing development.
However, uncertainties remain. Moody鈥檚 flagged that the US鈥檚 push to reshore key manufacturing sectors could limit the extent of gains for India.
Additionally, India faces its own tariff challenges with the US. On April 2, the US imposed an additional 26 percent reciprocal tariff on Indian exports, though this was temporarily suspended for 90 days. The underlying 10 percent baseline tariff continues to apply.
With the suspension due to expire on July 9, both sides are engaged in urgent negotiations over a proposed interim trade deal.
India is seeking expanded market access for labour-intensive goods, while the US is pushing for tariff reductions on its agricultural exports.
Despite the ongoing talks, Moody鈥檚 cautioned that any significant redirection of investment or supply chains will take years to materialise.
鈥淢ultinational firms are unlikely to make major investment decisions amid prevailing uncertainty. Most are expected to delay or pause commitments until greater clarity on trade policy emerges,鈥 the report said.