India well-placed to benefit from tariff-led trade shifts : Moody’s

NEW DELHI : India is well-positioned to benefit from a global realignment in trade and investment flows driven by shifting tariff regimes, and could outpace several Asia-Pacific (Apac) peers, Moody’s Ratings said on Thursday.

As multinationals reassess supply chains amid rising protectionism and evolving trade policies, India’s relative tariff advantage may strengthen its appeal as an emerging global manufacturing hub, Moody’s noted in its latest Sovereigns – Asia-Pacific Outlook.

“India may be subject to lower tariffs than many in Apac, which could help the economy attract further investment flows and support its development as a global manufacturing base. The signing of a free trade agreement with the UK in May and ongoing efforts to establish the same with the EU will further support such development,” the report said.

Moody’s pointed out that compared to countries like Cambodia and Vietnam, India is better placed to gain meaningfully from trade diversion and shifting capital flows—thanks to its scale, policy orientation, and improved market access through bilateral agreements.

The recently concluded free trade agreement with the UK was highlighted as a key enabler of India’s broader trade ambitions. Parallel efforts to negotiate a pact with the European Union are also expected to boost market access and strengthen investor confidence.

However, Moody’s cautioned that broader trends in global industrial policy could still temper the scale of these gains.

“The US’s goal to reshore select manufacturing segments could challenge the extent to which India benefits,” the report said.

The commentary comes as India accelerates its push to emerge as an alternative manufacturing base to China, supported by targeted policy incentives, supply chain development, and efforts to deepen trade integration with developed economies.

To be sure, US President Donald Trump’s “reciprocal tariffs” policy—announced in April—aims to impose higher duties on countries that levy steeper tariffs on American goods, triggering a wave of global trade renegotiations.

Under the plan, a broad 10% baseline tariff was introduced in April, with steeper rates imposed on countries such as China and Vietnam. A temporary 90-day pause was granted to allow for negotiations.

Since then, the US has revised trade deals with the UK, China, and, most recently, Vietnam, trimming their tariff exposure as it races to finalise more agreements before the 9 July deadline.

Meanwhile, Washington and New Delhi are negotiating a trade agreement to avoid the steep duties outlined in Trump’s plan.