India is emerging as a potential winner in the unfolding global tariff war, according to credit rating agency Moody’s. The agency’s latest commentary highlights India’s favorable tariff position compared to several Asia-Pacific (APAC) economies, suggesting that the country is well placed to attract incremental investment and trade diversion in the coming months.
The assessment comes amid escalating trade tensions between major global powers, particularly between the United States, China, and the European Union, leading to a re-evaluation of global supply chains. As these economies impose or face retaliatory tariffs, businesses are seeking alternative destinations for production and investment — and India appears to be high on the list.
Moody’s Highlights India’s Relative Advantage
Moody’s notes that India’s existing tariff structures, though not the most liberal, are still less punitive and more predictable than those of some APAC counterparts. This makes India relatively more attractive for global firms looking to hedge against geopolitical risks and policy instability in traditional manufacturing hubs.
The agency also highlighted India’s strategic position in the Indo-Pacific region, stable macroeconomic environment, and expanding infrastructure as key enablers of this advantage. With ongoing initiatives like the Production-Linked Incentive (PLI) scheme and Make in India 2.0, the government has already laid the groundwork to absorb and scale new investments, especially in electronics, pharmaceuticals, and renewable energy sectors.
Investment Shift Already Underway
Several multinational corporations, particularly in electronics and automotive sectors, have already begun shifting part of their operations to India. Apple’s key suppliers, global semiconductor firms, and electric vehicle manufacturers are reportedly expanding their footprint in India to reduce dependence on China and other tariff-heavy markets.
Moody’s anticipates that this trend will accelerate as the full impact of trade realignments unfolds. India’s large domestic market, coupled with improving ease of doing business indicators, further strengthens its appeal.
Challenges Remain
Despite the optimism, Moody’s warns that India must continue addressing structural challenges to fully capitalize on this opportunity. These include labor reforms, logistics infrastructure, complex taxation processes, and regulatory clarity across sectors. High import duties on certain components, while protecting domestic industries, could also deter some investors.
Moreover, India’s trade negotiation strategy will play a crucial role. Efforts to sign bilateral and regional free trade agreements (FTAs), such as those with the UK, EU, and EFTA nations, could help Indian exporters gain greater access to global markets, while keeping inbound tariffs in check.
Government Response and Outlook
Indian policymakers have welcomed the findings, with officials from the Commerce and Finance Ministries reiterating the country’s commitment to expanding manufacturing and integrating into global value chains.
With global supply chains undergoing a dramatic reset post-pandemic and amid geopolitical uncertainty, India stands at a crucial inflection point. As Moody’s puts it, India is not just a participant in the global tariff contest, but a “winner-in-waiting” — provided it continues on the path of structural and policy reform.
