U.S. tariff reduction positive for labour-intensive sectors: Moody’s

Moody’s Ratings on Tuesday (February 3, 2026) said the reduction of the U.S. 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 U.S. have agreed to a trade deal under which Washington will bring down reciprocal tariffs on Indian goods to 18% from the current 25%, U.S. President Donald Trump said on Monday (February 2) after a phone conversation with Prime Minister Narendra Modi.

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Moody’s, in a statement, said the trade deal will reinvigorate India’s goods export growth to the U.S., which remains the country’s largest goods export market, accounting for about 21% 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% high tariffs imposed by the U.S. 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.