US-India Tariff Deal Boosts Key Indian Exports

Moody's Ratings announced that the US reducing tariff rates on most Indian goods is beneficial for labor-intensive sectors such as gems, jewellery, textiles, and apparel. The US will lower the tariff from 25% to 18%, enhancing India’s export growth in these key sectors, but won't affect pharmaceuticals and consumer electronics.

The recent trade agreement between the US and India is set to benefit India's labor-intensive sectors, including gems, jewellery, textiles, and apparel, as observed by Moody's Ratings. In this deal, the US has agreed to lower reciprocal tariff rates on Indian goods, dropping from 25% to 18%.

The change is expected to boost India's export growth to the US, which currently accounts for about 21% of India's total goods exports. India's gems and textiles sectors stand to gain the most from the tariff reduction. Meanwhile, pharmaceuticals and consumer electronics remain unaffected due to prior tariff exemptions.

Despite a reduction in crude oil purchases from Russia by India, Moody's warns that completely ceasing these imports could disrupt economic growth. A broader shift to non-Russian oil might lead to global supply shortages, price hikes, and increased inflation in India, one of the largest oil importers worldwide.

(With inputs from agencies.)