International rating agency Moody's has retained India's Baa3 (BBB-) sovereign credit rating with a stable outlook, citing improved fiscal metrics and growth prospects. However, it warns that the ongoing conflict in the Middle East could moderate India's real GDP growth to 6% in FY27 and raise inflation risks, projecting inflation to double to 4.8% in FY27 from 2.4% in FY26. The agency highlighted that disruptions in the energy sector could lead to higher fuel costs and food inflation due to India's reliance on imported fertilizers. Additionally, trade dynamics are affected, with exports and imports each growing by 6.9% year-on-year in 2025. However, the Middle East accounts for 37% of India's inward remittances, and any disruptions in employment could impact domestic demand. Moody's noted that the rupee's depreciation is a concern, with global financial conditions and oil prices historically influencing foreign exchange stress. The report emphasizes the need for fiscal consolidation and structural reforms to improve India's credit profile and mitigate risks associated with the current geopolitical landscape.