Indian firms resilient to US tariff pressures: Moody's & ICRA
Most Indian non-financial corporates are shielded from US tariffs due to domestic focus, according to Moody's and ICRA. Textiles may gain from the Indiaâ€'UK FTA, while capex is expected to reach $50 billion annually over two years. GDP growth is forecast at 6.3 per cent in FY25. Despite geopolitical risks and sector-specific challenges, corporate balance sheets remain strong and well-positioned.
The Indian textile sector is expected to gain a competitive edge over China, buoyed by the recent India–UK Free Trade Agreement.
Continued government focus on boosting private consumption, expanding manufacturing capacity, and ramping up infrastructure spending is expected to offset weakening global demand, Moody's Ratings and its Indian affiliate ICRA said in a release.
'Shifts in global supply chains coupled with the Indian government's efforts to increase local production will benefit domestic manufacturing. However, challenges such as the inadequacy of skilled labour, evolving logistics infrastructure and complex land and labour laws in the country could constrain the growth of India's manufacturing sector', said Vikash Halan, managing director at Moody's Ratings.
Moody's is expecting these companies would invest approximately $50 billion annually in capital expenditure over the next two years, largely funded through internal accruals. As a result, average leverage levels, measured by debt/EBITDA, are projected to stay close to 3.0x.
Meanwhile, ICRA has noted that Indian corporates are generally well-positioned to weather tariff uncertainties and geopolitical tensions. However, sectoral vulnerabilities persist. Geopolitical risks, especially tensions with Pakistan, may temporarily impact the travel and hospitality sectors. Yet, India's overall exposure to such risks is seen as moderate.
ICRA has forecast India's GDP to grow by 6.3 per cent in fiscal 2025 (FY25) and 6.2 per cent in fiscal 2026 (FY26). Manufacturing momentum is accelerating under the Production-Linked Incentive (PLI) scheme.
'Urban consumption, muted in FY25, is expected to recover in FY26, supported by income tax relief, further rate cuts, and easing food inflation,' said K Ravichandran, EVP and chief rating officer, ICRA Ltd.
India's corporate sector has also seen significant deleveraging, with debt/OPBITDA improving to 2.1x as of March 2025, from 3.2x in March 2019. In the financial sector, despite some asset quality concerns in unsecured lending and microfinance, both bank and NBFC balance sheets remain stable and capable of supporting credit growth, contingent on liquidity conditions.
Fibre2Fashion News Desk (HU)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
12 minutes ago
- Hans India
Trump threatens more tariffs on India
Washington/New Delhi: In a fresh trade threat against India, President Donald Trump on Monday said he will "substantially" raise US tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits. Last week, the Trump administration slapped a 25 per cent duty on all Indian goods. The US President also announced a penalty for buying "vast majority" of Russian military equipment and crude oil, but no mention was made in the notification. "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits," Trump said in a social media post on Monday. "They don't care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA," he added. In its reaction, India said it will take all necessary steps to safeguard and promote national interest and that the implications of the tariffs are being examined. India's import of crude oil from Russia has risen from 0.2 per cent of total purchases before the Russia-Ukraine war to 35-40 per cent. New Delhi is the largest buyer of Russian oil after China. On August 1, Trump signed an Executive Order titled 'Further Modifying The Reciprocal Tariff Rates', raising tariffs for over five dozen countries, including a steep 25 per cent for India. The executive order, however, did not mention the 'penalty' that Trump had said India will have to pay because of its purchases of Russian military equipment and energy. White House Deputy Chief of Staff Stephen Miller, in an interview to Fox News Sunday, stated that President Trump has said very clearly that 'it is not acceptable for India to continue financing" the Ukraine war by purchasing oil from Russia. Last week, Trump mounted a sharp attack on India and Russia for their close ties and said the two countries can take their "dead economies down together", a remark which prompted New Delhi to say that India is the world's fastest-growing major economy. Declaring that the US has a massive trade deficit with India, Trump had said that while 'India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country.
Indian Express
12 minutes ago
- Indian Express
Express View: In the wake of Trump's latest moves, Delhi must push ahead with the trade deal
Days after US President Donald Trump announced a 25 per cent tariff on Indian imports, and an unspecified penalty for defence and energy imports from Russia, the Indian government has initiated an exercise to thrash out concessions across sectors that can be put forth in trade talks between the two countries. As reported in this paper, key ministries have been directed to examine what can be offered to make the deal more attractive to Trump, with the US said to be pushing for greater market access than what has been on the table so far, bringing down tariff walls and doing away with non-tariff barriers. Another round of talks is slated to be held in the last week of August. There will be red lines, of course. The government, for instance, is reluctant to give concessions on some agri items, even as it must negotiate to increase market access to the world's largest economy — in 2024-25, India exported goods worth roughly $87 billion to the US, led by electronics (17.6 per cent of exports), pharma (11.8 per cent) and gems and jewellery (11.5 per cent). The imposition of higher tariffs on the country as compared to those levied on its competitors such as Vietnam and Indonesia will impact export competitiveness and have implications for the broader economic momentum. Assessments by various agencies have provided some sense of the possible impact on the Indian economy — ICRA, for instance, has lowered its GDP growth forecast for the year to 6 per cent from 6.2 per cent earlier, while CareEdge Ratings has estimated the direct export loss to be around 0.3 to 0.4 per cent of GDP. Some of the options before the government reportedly involve increasing purchases of defence equipment and oil, and greater nuclear engagement, among others. Indian refiners have already cut down on oil imports from Russia to 1.6 million barrels per day in July, down 24 per cent from the month before. This decline has been offset by higher imports from countries such as Saudi Arabia, the UAE, the US and Nigeria. Concessions to the US could also be granted in areas of public procurement — in line with the India-UK trade agreement. Delhi's sober response, in the face of Trump's broadside — the US President has called India a 'dead economy' — reflects pragmatism when faced with pressure tactics designed to extract concessions. But, in a changed global order, where Trump is undoing the rules that underpinned the global trading system, a business-as-usual approach is unlikely to work. India should continue to sidestep the loose rhetoric, while moving ahead with negotiations to conclude a deal that delivers benefits to both sides. Alongside, it should press forward the domestic reform agenda to boost competitiveness, improve ease of doing business, and increase the attractiveness of the country as an investment destination.
Hindustan Times
12 minutes ago
- Hindustan Times
Sunil Chhetri and other Bengaluru FC players' salaries put on hold after ISL club takes 'difficult' decision
Bengaluru FC confirmed their decision to "indefinitely" suspend salaries of players and coaching staff belonging to the first team, due to the growing uncertainty over the future of the Indian Super League (ISL). There has been a long impasse between the All India Football Federation (AIFF) and the Football Sports Development Limited (FSDL), and as a result, it is not known whether the premier football tournament in India will proceed further or not. Bengaluru FC has decided to put players' salaries on hold(PTI) The ISL's upcoming season has already been 'put on hold' as stated in the FSDL's letter to all the clubs. The official communication was issued last month. 'In view of the uncertainty surrounding the future of the Indian Super League season, Bengaluru Football Club has taken what is a very difficult decision of indefinitely suspending the salaries of the players and staff belonging to the first team,' the club, which won the ISL in the 2018/19 season," Bengaluru FC said in their official statement. 'Running and sustaining a football club in India has always been an uphill climb, one we have put everything aside made, season after season. However, the lack of clarity on the League's future leaves us with no choice but to take this step. The future and well-being of our players, staff and their families is of utmost importance to us, and we are in touch with them as we wait for a resolution," the statement added. In its official statement, the club also urged the AIFF and FSDL to end this impasse, as a prompt resolution is essential for the future of Indian football. 'We urge the AIFF and FSDL to end this impasse swiftly. The uncertainty benefits no one, and a prompt resolution is vital for the future of Indian football," the club stated. "The club remains committed to growing and developing the sport and our operations with our youth teams – men and women, and BFC Soccer Schools remain unaffected by this decision," the statement added. AIFF officials to meet ISL clubs The official account of Indian football on Mondau stated that the AIFF officials will meet with CEOs from eight ISL clubs later this week to discuss the ongoing issues that have led to the tournament being put on hold. "Announcement. AIFF officials will meet with CEOs from eight Indian Super League clubs, on Thursday, August 7, 2025, in New Delhi, to discuss issues regarding #IndianFootball," the handle wrote on X (formerly Twitter). The first edition of the ISL took place in 2014, with Atletico de Kolkata winning the inaugural edition. The tournament has been held in India for 11 seasons, with Mohun Bagan Super Giant winning the latest 2024-25 season.
