Moody's Analytics reduces India's growth forecast from 2025 to 6.1% amid rising US tariff pressure | Mint

New -delhi: Moody’s Analytics on Thursday hampered its calendar year (CY) 2025 growth forecast for India to 6.1%, reducing it by 30 basis points from the Project of March, in response to US rates. “Although US President Donald Trump has just declared a 90 -day freezing point on most of the hard rates announced a week ago and applied a 10% blanket tariff in their place, the April’s basic toll is the economic toll they will have if they finally continue,” Moody’s analysis said in a note. “Cambodia, Laos, Vietnam, Thailand, Taiwan, India, South Korea, Japan, Indonesia and Malaysia would be subject to new rates ranging from 24% to 46% from April 9. With the exception of China, the latest policy pivot means that everyone is now looking at a 10%. The Trump administration imposed a 27% reciprocal tariff on Indian goods last week, claiming that the South Asian country charges an average of 52% on US imports. The move has the trade, currency and capital flow of the move, which poses both risks and opportunities for India. On April 9, the Trump administration moved to facilitate temporary duties on trade partners, including India, with the US reciprocal tariff on India that stood temporarily at 10%. “The big unknown is how negotiations can change the scope and duration of rates in all directions and whether the US will extend its 90 -day break on rates for 75 countries,” Moody’s said. “Uncertainty is tangible, with tumbling and volatile stock markets combating financial markets turbulence. The negative and pervasive impact of a sustained increase in uncertainty cannot be underestimated,” he added. For India, the challenge is largely twofold: managing immediate disruptions and positioning itself for long -term profits. Meanwhile, the announcement of the reciprocal rates comes in the background of a broader slowdown in India’s economic momentum. The GDP growth in the December quarter (Q3, FY25) stood at 6.2%, which dropped from a two-year low in the previous quarter. To meet the National Statistical Office’s revised 6.5% of 6.5% of 6.5% for FY25, the Indian economy must expand in the January-March quarter with a sharp 7.6% of an ambitious target amid a long-standing global uncertainties and domestic demand. Meanwhile, India’s real GDP growth forecast for FY2025-26 has been reduced to 6.5% of the earlier projection of 6.7%, by the Reserve Bank of India (RBI) during the Central Bank policy review earlier this week. The Asian Development Bank also recently reduced India’s FY26 GDP growth forecast to 6.7% from 7%, which calls US rates as an important risk for trading, investment and financial market stability. In comparison, a recently released EY Economy Watch report projects that the economy of India is likely to grow by 6.5% in FY26, with an emphasis on the need for a well-calibrated fiscal strategy that supports human capital development while maintaining fiscal caution. According to Moody’s Analytics, the US reciprocal tariff on Indian import key sectors such as gemstones, medical devices and textiles will hit, but total growth is expected to remain resilient, given India’s limited dependence on external demand. However, it expects the RBI to reduce interest rates-probably in 25-base point steps-the policy rate by the end of the year to 5.75%, at the point of relieving the head, combined with earlier tax incentives announced in the budget, it is likely to support the domestic demand and support the economy. The tempo setting panel also moved its policy attitude from neutral to accommodating, indicating the likelihood of further repo rate cuts. First published: 10 Apr 2025, 08:04 IST