Moody’s: Indian Ports Poised to Gain from China+1 Shift

Indian Ports Poised for Strategic Upside Amid China+1 Shift, Says Moody’s Ratings

Indian ports are emerging as strategic beneficiaries of the global manufacturing shift driven by the China+1 strategy, according to a new report released by Moody’s Ratings on May 20. The agency noted that efforts by global companies to diversify supply chains away from China could offer significant opportunities for ports in India and Indonesia, particularly as geopolitical and tariff-related uncertainties persist.

Moody’s underscored that while Chinese ports may face weakening financials due to mounting trade headwinds, their strong balance sheets should provide the capacity to endure short-term pressure. In contrast, Indian ports stand to gain from increased shipping traffic and infrastructure investment as companies seek alternative manufacturing hubs across Asia.

Highlights

• Moody’s sees Indian ports as beneficiaries of China+1 supply chain strategy

• Financials of Chinese ports could weaken amid trade and geopolitical stress

• India and Indonesia well-positioned to attract global manufacturing relocation

• Diversification efforts likely to increase port activity and logistics demand in India

Tariff Risks and Regional Geopolitical Tensions Add Complexity

Moody’s further warned that tariffs and geopolitical volatility remain key sources of risk for emerging markets. The report cited a recent terrorist attack in Pahalgam, Jammu & Kashmir, which killed 26 tourists—the worst incident in nearly 30 years—as a sign of brewing tensions between India and Pakistan that could cloud the investment outlook.

Despite these challenges, India is expected to weather US tariffs better than most emerging markets, according to the agency. Moody’s cited India’s low direct trade exposure to the US and its large, resilient domestic market as key buffers that support macroeconomic stability in the face of rising global protectionism.

Highlights

• Terrorist attack in Pahalgam worsens India-Pakistan tensions

• Geopolitical risks add uncertainty for emerging market investors

• India less exposed to US tariffs; domestic demand offers stability

• Diversified exports to the US limit potential downside from trade barriers

Moody’s Trims India’s 2025 Growth Forecast, Maintains Medium-Term Optimism

While Moody’s Ratings acknowledged the potential advantages of the evolving global trade landscape, it revised India’s GDP growth forecast for 2025 downward to 6.3%, compared to its earlier projection of 6.7%. The revision reflects short-term headwinds from global uncertainty, inflationary pressures, and the impact of slower global trade.

However, the agency remains optimistic about the medium-term trajectory of the Indian economy, forecasting a growth rebound to 6.5% in 2026. It believes India’s structural strengths—including a large consumer base, infrastructure push, and ongoing investment in manufacturing and logistics—will help it outperform many peers in the region.

Highlights

• India’s 2025 GDP growth forecast cut to 6.3% from 6.7% by Moody’s

• Growth seen improving to 6.5% in 2026 amid domestic resilience

• Large domestic economy and low US exposure seen as advantages

• Manufacturing diversification and port development to drive future momentum