Private capex to remain measured amid external headwinds

Indian enterprises are well positioned to handle the impact of tariffs and geopolitical tensions, Moody's Investors Service and its local arm Icra Ratings said on Wednesday.

India Inc, however, will be "measured" in making investment decisions in the new fiscal because of the external headwinds, they said. "Indian non-financial companies are not directly affected by US import tariffs due to their focus on domestic consumption and low dependence on exports," a statement from Moody's said.

It further noted that government initiatives to boost private consumption, expand manufacturing capacity and increase infrastructure spending will help offset the weakening outlook for global demand.

"Private capex to remain measured amid external headwinds," it said. Indian corporates will continue investing in new capacity to cater to the sustained growth in domestic consumption, and Moody's estimated that non-financial companies rated by it will spend around USD 50 billion annually in capital spending over the next two years.

It said most companies will spend from internal accruals, and the average portfolio leverage will continue to remain at 3 times the operating profit. Moody's Ratings managing director Vikash Halan said India's manufacturing growth will be constrained by challenges such as inadequacy of skilled labor, evolving logistics infrastructure and complex land and labor laws.