(MENAFN) India's economy is projected to expand 7% this year despite facing severe trade restrictions from Washington, ratings agency Moody's announced in a striking assessment of the nation's resilience.

In its Global Macro Outlook report released Thursday, the agency concluded that Washington's aggressive 50% tariff wall targeting India would fail to derail economic momentum.

"Indian exporters, facing 50% US tariffs on some products, have succeeded in redirecting exports, its overall exports climbed 6.75% in September even as shipments to the US dropped 11.9%," Moody's said in the report.

The US implemented a 25% import levy on India last August following collapsed trade negotiations between the nations. Washington subsequently imposed an additional 25% punitive tariff on New Delhi over its sustained purchases of Russian oil.

Moody's identified consumer demand and infrastructure investment as primary drivers propelling economic expansion.

The agency also noted that private sector capital spending is likely to remain cautious.

India's central bank, the Reserve Bank of India (RBI), has calculated economic growth for the 2025-26 fiscal year at 6.8%, while the nation's finance ministry has forecasted 6.3%-6.8% expansion.

Official statistics recorded economic growth in the January-March quarter at 7.4%, accelerating to 7.8% in the April-June period.

Moody's has additionally forecast the Indian economy will advance 6.4% in 2026 and 6.5% in 2027.

Last September, India unveiled Goods and Services Tax (GST) reductions designed to stimulate consumer spending before the festive season.

The ratings firm credited accommodative monetary policy and subdued inflation for supporting economic performance.

The RBI reduced its benchmark policy rate three times in 2025, including a 50 basis point reduction in June.

India's retail inflation plummeted to a historic low of 0.25% in October, down from a revised 1.44% in September, government statistics show.

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