US tariff reduction positive for labour-intensive sectors: Moody's

New Delhi: Moody's Ratings on Tuesday said the reduction of the US tariff rate on most Indian goods is credit positive for labour-intensive sectors such as gems, jewellery, textiles and apparel, which are the top export sectors.

India and the US have agreed to a trade deal under which Washington will bring down reciprocal tariff on Indian goods to 18 per cent from current 25 per cent, US President Donald Trump said on Monday after a phone conversation with Prime Minister Narendra Modi.

Moody's in a statement said the trade deal will reinvigorate India's goods export growth to the US, which remains the country's largest goods export market, accounting for about 21 per cent of India's total goods exports for the first 11 months of 2025.

"Lower tariff rate will also be credit positive for labour-intensive sectors such as gems, jewellery, textiles and apparel, which rank the top export sectors," it said.

However, pharmaceuticals and consumer electronics, the other two major export sectors, had been exempt from the 50 per cent high tariffs imposed by the US and therefore are unlikely to be affected by the reduction.

Moody's said even though India has reduced its purchase of crude oil from Russia in recent months, it is unlikely to cease all purchases immediately which could be disruptive to India's economic growth.

"A complete shift toward non-Russian oil could also tighten supply elsewhere, raise prices and pass through to higher inflation given that India is one of the world's largest oil importers," Moody's said.