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Moody's Ratings highlights that the US tariff cut to 18% on most Indian goods is credit positive for labor-intensive sectors like gems & jewelry, textiles, and apparel, reinvigorating US export growth. India will likely phase out Russian oil gradually to avoid supply tightening, price hikes, and inflation spikes.
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Economic Implications
The deal eases prior 50% tariff pressures that threatened 0.3pp GDP drag. Gradual Russian oil pivot prevents disruption, preserving growth at ~6.3% FY26 while mitigating import bill surges.
Key Highlights
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Tariff Benefits: Lower rates aid gems/jewelry (30% US exports), textiles/apparel; boosts competitiveness vs. peers.
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Export Rebound: Revives stalled growth to US (largest destination); supports manufacturing push.
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Oil Transition Caution: Full Russia exit tightens global supply, raises prices/inflation; phased approach preferred.
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Growth Safeguards: Strong reserves, services demand buffer risks; no immediate crude halt.
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Sector Winners: Labor-intensive industries gain jobs, FDI; pharma, autos partially exempt.
Outlook
Credit positive overall; monitors oil pivot speed. Enhances India's rating stability amid FTAs.
Sources: InformistMedia.com, EconomicTimes.com
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