‘India Inc well positioned to handle tariff, geopolitical challenges; capex to be measured’

Indian enterprises are properly positioned to deal with the impression of tariffs and geopolitical tensions, Moody’s Investors Service and its native arm ICRA Ratings mentioned on Wednesday.

India Inc, nonetheless, can be “measured” in making investment decisions within the new fiscal due to the exterior headwinds, they mentioned.

“Indian non-financial corporations usually are not immediately affected by US import tariffs attributable to their give attention to domestic consumption and low dependence on exports,” a press release from Moody’s mentioned.

It additional famous that authorities initiatives to spice up personal consumption, develop manufacturing capability and improve infrastructure spending will assist offset the weakening outlook for international demand.

“Non-public capex to stay measured amid exterior headwinds,” it mentioned.

Indian corporates will proceed investing in new capability to cater to the sustained progress in home consumption, and Moody’s estimated that non-financial corporations rated by it can spend round USD 50 billion yearly in capital spending over the following two years. It mentioned most corporations will spend from inner accruals, and the common portfolio leverage will proceed to stay at 3 instances the working revenue. Moody’s Rankings managing director Vikash Halan mentioned India’s manufacturing growth can be constrained by challenges similar to inadequacy of expert labour, evolving logistics infrastructure and sophisticated land and labour legal guidelines.

Choose auto elements classes, minimize and polished diamonds, and seafood exports have notable publicity to the US market and will face headwinds from demand moderation or rising competitors, it mentioned, including that the textiles sector is predicted to learn from its comparative advantage over China.

Geopolitical tensions, notably the India-Pakistan battle, might weigh on near-term demand for journey and hospitality providers. Nonetheless, India’s general publicity to those dangers stays average, it mentioned.

ICRA’s chief score officer Okay Ravichandran mentioned after being muted in FY25, city consumption is predicted to get better in FY26 supported by revenue tax reduction, additional price cuts, and easing meals inflation, and the identical will profit cars, shopper items, and providers sectors.

In the meantime, on the infrastructure creation entrance, ICRA forecasted a slowdown in street development exercise within the near-term, whereas different segments like ports and information centres will proceed to witness important investments, benefiting from strong authorities assist, wholesome capital outlays and a big pipeline of tasks.

The score companies mentioned the nation wants large investments to satisfy its 2070 net-zero pledge, explaining that the nation is grappling with the trilemma of vitality safety, affordability and transition.

Over the following decade, these investments are projected to represent 2 per cent of actual GDP for the electrical energy worth chain, encompassing energy era, storage, transmission and distribution, it mentioned.