India’s recovery will be led by sectors such as ferrous and non-ferrous metals, auto and textiles: Moody’s and ICRA

Increasing activity in the housing and auto sectors along with higher infrastructure spending will, in turn, drive demand in key industries such as steel, oil and gas and cement, said rating agencies Icra and Moody's in a webinar on Thursday.

"A rising preference for personal mobility vehicles, along with the government's new voluntary vehicle scrappage policy, will support automobile demand. In the housing sector, the shift toward flexible work arrangements combined with tax incentives for affordable homes will propel demand,” said Vikas Halan, a Moody's Associate Managing Director in a joint webinar by rating agencies Icra and Moody’s, On India Credit Outlook 2021.

Prevailing low-interest rates and the government's reforms to boost domestic manufacturing will also support corporates' credit profiles, Halan added.


According to ICRA, payment moratoriums, additional funding lines and one-time restructuring options have enabled corporates in stressed sectors like textiles, healthcare and auto ancillaries to successfully navigate the challenging environment.

Despite these improvements, India remains vulnerable to the threat of rising infections and fresh lockdowns, and to the risk of an uneven or underwhelming economic recovery, said the rating agency in a media statement.

“ICRA has maintained a negative outlook on sectors that remain most impacted by the pandemic in the near to medium term, including the aviation, hospitality and retail sectors,” the statement said.

Moody's expects the Indian government will drive infrastructure investment for the next 1-2 years, which will help address infrastructure constraints and support future private investment.

“Traditional infrastructure segments like power and transportation will likely receive the bulk of investments, as will segments with critical infrastructure gaps, such as healthcare, cold chain, water and sanitation, over the next 6-12 months,” the agency said in a media statement on Thursday.